Netherlands

Moderate growth on back of stronger domestic demand, but impacted by trade uncertainty

The outlook for the Dutch economy is very mixed. Stronger support should come from private consumption as purchasing power continues to increase according to the Netherlands Bureau for Economic Policy Analysis. After posting strong nominal growth of 5.4% in 2024 (2% growth in real wages), wages are projected to increase by another 5.5% in 2025 to further compensate higher inflation, ahead of a 4.2% increase forecast for 2026. In 2025, purchasing power has also been boosted by the reduction in consumer tax for fuels that will remain in place until the end of the year, as well as an income tax break for households with low to medium incomes (threshold set at EUR 38,000). In 2026, however, some goods and services will be excluded from the reduced VAT of 9% and taxed at 21%. Accommodation, books, magazines, gyms and sports events, as well as cultural venues including museums, concerts and theaters. Meanwhile, the inflation rate should decrease for the most part in 2026 on back of lower price increases on rents and services. Positive contribution to growth should also come from private housing construction. Remarkably towards the end of 2024, the number of construction permits grew noticeably, implying stronger construction activity in 2025 in a sector that has remained generally very robust in the Netherlands compared to neighbouring countries. The ECB’s monetary policy should support the trend in the coming quarters. In the first half of 2025, the ECB’s key interest rate (deposit rate) was cut by a total of 0.5 percentage points to 2%, which is considered to be the neutral level. Given the modest economic growth in the eurozone and the region’s stable inflation outlook, two more 25 basis-point cuts could be made by the end of 2025. Although interest rates are likely to remain unchanged in 2026, two further cuts cannot be excluded if recovery remains sluggish. Last, support should come also from public spending as the Netherlands is planning to increase defence spending from 1.4% of GDP in 2024 to around 1.6% in 2025, and up to 2% in 2026. Higher healthcare spending should also be supportive.

Corporate investment should also benefit from lower interest rates, but could nevertheless see slower growth. One reason is that many companies brought forward their investment in transport equipment to 2024 in anticipation of an increase in the motor vehicle tax, which went up by an average of 5.9% in early 2025, and the tax break on the e-vehicles was reversed (the vehicle tax discount for e-cars is 75% for 2025 and will be 25% in 2026). Furthermore, uncertainty over the EU-US trade agreement is still very high, which makes companies cautious about their investment decisions. At the time of writing, no EU-US trade deal officially exists, only a political agreement setting the US-import tariffs on EU goods at 15%. This tariff is expected to cover cars and car parts, as well as pharmaceuticals, but excludes steel, aluminium and copper which are subject to a tariff of 50%. Exemptions are anticipated, e.g., for some agricultural products and special chemicals, but these have not been clarified yet. Furthermore, EU tariffs on US imports are likely to be eliminated, which would impact the Dutch agricultural market. As far as we can tell, the short-term direct impact of these tariffs should be limited given that the US ranked fifth in terms of export destinations in 2024 with 5.7% of total Dutch exports, followed by Germany, Belgium, France and the UK. The main exported products to the US are machinery (accounting for 9.4% of all Dutch machinery exports), beverages (8.9%) and pharmaceutical products (8.2%). At least in the near term, US demand for these products should not change drastically as it takes time to build up production capacities. However, the overall effects are very unclear as the main Dutch export destinations in Europe could be noticeably impacted by US tariffs. The Dutch service sector, which includes legal consulting for international trade, could reap the benefit of trade uncertainty.

Public deficit will widen noticeably, but remain within the Maastricht target

The public deficit is expected to jump to 2.1% in 2025 and reach 2.7% in 2026, its highest level in 13 years (except for 2020 when the deficit was 3.6% of nominal GDP). Higher spending on healthcare, social security and defence have taken place amid lower tax revenues in 2025. In 2026, revenues should increase again due to the change VAT revenues, but the overall result has been impacted by a one-off effect due to the transfer of military pensions from the state to a private pension fund, which requires extra state payments of 0.7% of GDP. That said, the public deficit will remain below Maastricht criteria and the Netherllands’ public debt level will remain very low, especially when compared to its European neighbours.

The outlook for the Dutch current account surplus continues to be clouded by heavy uncertainty. For the moment, it is expected that a decrease of the trade in goods surplus would be partially balanced by a higher trade in services surplus, with limited change for the primary income deficit (resulting from the balance of in and outgoing labour and capital income) and unchanged flows of foreign workers’ remittances.

Far-right conservative government collapses after 11 months - snap election in October 2025

The first far-right conservative coalition government collapsed in June 2025. It had been formed in July 2024 after a long negotiation process. After the last snap election in November 2023, the far-right "Party for Freedom" (PVV) party was the strongest force with a total of 37 out of 150 seats in the Tweede Kamer (House of Representatives). Geert Wilders, as leader of the PVV, started coalition talks but failed to form an alliance that would support him as the future Prime Minister due to his extreme anti-Islamic stance that deterred potential coalition partners. In the end, Wilders renounced his bid and a coalition comprising the PVV, the conservative-liberal VVD (24 seats), the newly founded centrist New Social Contract (NSC, 20 seats) and the agrarian right-wing BBB (7 seats) coalition was formed under the leadership of Prime Minister Dick Schoof, an independent technocratic politician. Throughout its brief tenure, the government repeatedly teetered on the brink of collapse, often as a result of Geert Wilders’ solo efforts. He demanded the introduction of measures to drastically reduce immigration without parliamentary approval, which would be only legal in times of a declared state of immigration emergency and would have needed EU approval. While the NSC could often mediate between the PVV and the other parties, the PVV quit the government in June 2025 after its coalition partners refused to endorse another 10-point plan to drastically reduce immigration, which could have breached existing laws. As the coalition without the PVV had only 51 out of 150 seats, the government stepped down and remained in office merely as a caretaker government. A snap election has been scheduled for 29 October 2025.

Political opinion changes relatively fast in the Netherlands. In the spring of 2024 (before the formation of the last government), the PVV polled a high 33% approval rating after winning 24% of the votes in the 2023 elections. Polls held in the summer of 2025 showed the PVV still leading. However, Wilder’s party has lost some support as according to a POLITICO survey in mid-August 2025, it would win only 19% of the seats, closely followed by the Social Democratic-Green PvdA-GL union with 18% of the seats, up from 16% in the 2023 elections. The big surprise came from the Christian-Democratic conservative CDA which garnered 15% of the seats. The CDA dominated the Dutch party system between 1977 and 1994, as well as during the 2000s, before losing support in the last 15 years, scoring a low point of 3% of the seats in 2023. Support for the VVD, led by former Prime Minister Mark Rutte, stands at 12% followed by the social-liberal party D66 (7% of the seats). The other current coalition partners, the NSC and the BBB no longer play a significant role in the polls, with respective scores of 1% and 3%. Given Wilder’s uncooperative political style in the last election, it is highly likely that the other parties will want to avoid the PVV as a coalition partner. Although there was never a coalition grouping the PvdA-GL, the CDA and the VVD, all have previously formed coalitions with one another and could technically form a coalition despite their ideological differences to avoid being roped in with the PVV.

Payment

In the Netherlands, bank transfers are by far the most common payment method for both domestic and export business-to-business transactions. All Dutch banks are linked to the SWIFT electronic network, which provides low-cost, flexible and rapid processing of international payments. Direct debit and different centralised local cashing systems are also widely used. Online sales are increasingly popular and most companies now use digital banking software. Cash payments are gradually disappearing and other payment methods, like cheques and bills of exchange are rarely used.

Debt Collection

Amicable phase

A debt collection process usually begins and ends by sending the debtor a (sometimes registered) collection letter. Sending letters (only) by email is becoming more and more customary. Besides the principal claim amount, the collection letter usually also includes a demand to pay accrued interest and extrajudicial costs. If the interest rates and/or costs have not been agreed by contract, Dutch law regulates the limits for both. If amicable actions, which include reminders by phone and possibly a debtor visit, do not result in full payment, the creditor can initiate legal action, in accordance with Dutch civil law.

LEGAL PROCESS

Fast-track procedures

In urgent cases, claims can be submitted for a fast track procedure (kort geding). These proceedings resemble those of the regular civil court but, if convinced of the plaintiff’s arguments, the judge (ruled by the President of the district court) delivers a verdict within a very short period of time – usually between two to four weeks. During this somewhat simplified procedure, the judge often makes a temporary or provisional ruling for more urgent matters. If, subsequent to this provisional decision, the parties do not reach a final settlement on all issues, they then need to obtain a final judgement in a “regular” civil suit (bodemprocedure).

The fast track procedure in the Netherlands differs from the (European) payment order procedure used in many other European states. It always requires the assistance of a lawyer and personal appearances by all parties before the judge. As this makes the fast track procedure rather expensive, it is not often used in regular collection cases.

Ordinary proceedings

The regular civil court procedure, held in one of the eleven district courts (Rechtbank), is the most frequently used recourse of action. Claims of €25,000 or less are heard by a judge of the cantonal sector of the district court (kantonrechter), while claims in excess of €25,000 are presented before the civil law sector. The main difference in the civil law sector is that both the plaintiff and the debtor have to be represented by a lawyer, whereas in the cantonal sector parties are permitted to argue their own cases. Both types of procedures begin with a bailiff serving the debtor with a writ of summons. In many cases, debtors do not contest the claim or appear in court. This results in a judgment by default being given, usually within six to eight weeks. If the debtor does appear in court, the judge sets a date for them or their lawyer to prepare a written statement of defence (conclusie van antwoord). However, when appearing before a cantonal sector judge, debtors can represent themselves and plead their cases verbally. After the first plea, it is standard procedure for the judge to schedule personal appearances by both parties to obtain more information and to see if a settlement is possible (comparitie van partijen). If not, the court can either pass judgement immediately or, in more complex cases, give the plaintiff the opportunity to deliver a replication (conclusie van repliek). The defendant can then reply by rejoinder (conclusie van dupliek). These proceedings take, on average, six to twelve months.

Winding-up proceedings

A third and often effective procedure for collecting payments is by filing a winding-up petition at the district court. This type of petition must be filed by a lawyer and the applicant needs to submit evidence of a payment default on an undisputed debt and of the existence of at least one other creditor having an undisputed claim of any kind (for example, commercial debt, outstanding alimony or taxes). The debtor is then formally notified by a bailiff that a winding-up petition has been filed. To avoid bankruptcy, the debtor can choose to appear in court to dispute the claim (or the fact that there are other creditors) or propose an out of court settlement. As most debtors try to reach a settlement, these proceedings are often cancelled before the date of the court hearing. Otherwise, and if there is sufficient evidence, the debtor is then declared bankrupt. Approximately 95% of all bankruptcies result in no payment being received by non-preferential creditors.

Retention of title and right of reclamation

Besides initiating legal action or claiming retention of title (if stipulated), sellers of goods can often exercise their right of reclamation (recht van reclame) for unpaid goods. This entails sending the debtor a registered letter which invokes this right. The contract is thus terminated and by law, ownership of the goods returns to the creditor. However, this recourse of action does require the goods to be in their original state. The registered letter must be sent within 6 weeks of the claim being due and within 60 days of the goods being delivered. 

Enforcement of a Legal Decision

If a debtor does not voluntarily comply with a court decision, the creditor can initiate actions to enforce the judge’s ruling. As most court decisions become effective immediately, creditors do not need to wait for the three month period of appeal to expire. Enforcement laws lay down statutory rules on coercive measures and how these measures can be applied. In the Netherlands, only bailiffs are authorised to levy enforcements and are instructed by the creditor. Two conditions need to be met before coercive measures begin. The bailiff must be in possession of a writ of execution (an original and enforceable judgment) and the party on which the enforcement will be levied must have prior official notification of the writ.

Court decisions rendered by other EU countries benefit from specific enforcement mechanisms, including the EU payment Order and the European Small Claims procedure. Decisions issued by non-EU countries can be recognised and enforced on a reciprocal basis, provided that the issuing country is part of a bilateral or multilateral agreement with the Netherlands. In the absence of such an agreement, an exequatur procedure can be carried out in the Dutch?courts. 

Insolvency Proceedings

RESTRUCTURING PROCEEDINGS

Corporate debt restructuring entails using the suspension of payments (surseance van betaling) procedure. The debtor is granted temporary relief from creditors, in order to allow them to reorganise, continue with business operations and ultimately satisfy their creditors’ claims, all under the supervision of a court-appointed administrator. A plan is proposed and must be approved by two-thirds of the creditors representing three-quarters of the total outstanding?debt.

BANKRUPTCY PROCEEDINGS

The debtor’s assets are liquidated by the court-appointed trustee. This procedure commences when the debtor has ceased payments and the District court has declared the debtor bankrupt. If a creditor makes a request for the debtor to be declared bankrupt, there must be at least two creditors with overdue claims. However, when liquidation is requested by the debtor, evidence of additional creditors is not mandatory.

The trustee establishes a list of creditors, the debtor’s assets are auctioned and the proceeds then distributed between the creditors.

Last updated: August 2025