The entity exists, the registrations are in order, the first invoices are due, and three institutions have declined. At that point the question changes. It is no longer how to persuade a Dutch bank, which may take months and may not succeed, but how to operate a Dutch company that does not have a Dutch bank account. That question has a real answer, and it is neither as simple nor as disreputable as the two things a founder is usually told.
What a refusal actually is
A refusal is a commercial and regulatory decision by one institution about one file at one moment. It is not a finding about the company, and it is not a national position. Risk appetites differ between institutions and shift over time, and a file declined by a large retail bank with a conservative posture towards newly incorporated entities with foreign ownership is frequently accepted elsewhere on identical facts.
Two disciplines follow. Apply in parallel rather than serially, because sequential applications convert a three month problem into a nine month one. And record what was asked and what was answered, because a subsequent institution will ask whether an application has been made elsewhere and what became of it, and an unexplained gap reads worse than a decline.
Payment institutions and electronic money institutions, defined properly
The alternatives are not unregulated. Under the Dutch financial supervision act, article 2:3a prohibits anyone with its seat in the Netherlands from carrying on the business of payment service provider without a licence granted by the central bank, and article 2:10a separately prohibits issuing electronic money without one. Banks and licensed electronic money institutions are carved out to the extent their own licences permit them to provide payment services. The act also lets an institution licensed in another member state operate here through a branch, an agent or the direct provision of services, under the single European authorisation.
The distinction between the two categories matters less to a user than it sounds. A payment institution executes payment transactions. Article 3:29c lets it hold payment accounts only where they are used exclusively for those transactions, and provides that the money it takes in from users is not repayable funds. An electronic money institution additionally issues electronic money, which article 4:31 requires it to do at par value against funds received, and on which it may grant no benefit linked to how long the holder keeps it. In both cases the user gets an account identifier, can send and receive transfers and can usually hold balances in several currencies. What the user does not get is a bank. Where such an institution lends in connection with the payment services in points 4 and 5 of the directive annex, article 40c of the prudential rules decree allows it only if, among other conditions, the credit is ancillary and granted solely in connection with the execution of a payment transaction, is not granted out of money received or held for future payment transactions and, for a service provided into another member state or from a branch there, is repaid within a short period that can in no case exceed twelve months.
What safeguarding means, and what it does not
One qualification runs through this section and the one before it. The chapter of the prudential rules decree that carries articles 40a to 40c, articles 3:29a and 3:29aa of the act, and the rules of article 3:29c relied on above, are written for the payment institution or electronic money institution that has its seat in the Netherlands. Where the provider is established in another member state, the duty is not absent but comes from elsewhere: article 10 of the payment services directive imposes the same two routes on every member state, with the home state defining which low risk assets qualify. What such a provider does not have is the Dutch separate estate described below.
This is the part most commonly misdescribed, in both directions. Client funds at these institutions are protected, but by a different mechanism from the one that protects bank deposits. Article 40a of the prudential rules decree requires a payment institution that receives funds from payment service users to safeguard them. One route keeps them unmixed with the funds of the institution’s other creditors; a second covers them with an insurance policy or comparable guarantee from an insurer or bank outside its own group for an equivalent amount; and the act offers a third, a dedicated account at a bank with its own seat in the Netherlands and licensed by the European Central Bank or the central bank, which article 3:29aa turns into a separate estate that answers the account bank’s claims for running it under its agreement with the institution and the users’ claims arising from having entrusted the money, in that order on a winding up where there is not enough to go round, and no other claims until those are secure. Where the share destined for future transactions is unknown or variable, article 40a lets those first two routes be applied instead to a representative portion, one that can reasonably be estimated from historical data.
Where the segregation route is used, the rule is specific. If the funds have not been passed to the payee or another payment service provider by the end of the business day following the day of receipt, they must be placed in a separate account at a bank or a central bank, or invested in secure, liquid, low risk assets, in such a way that the institution’s other creditors cannot recover against them, in particular on its insolvency. For electronic money, article 40b requires safeguarding as soon as the funds become available and at the latest five working days after the electronic money is issued.
That is real protection, designed for exactly the failure people worry about. Against the failure of the institution itself it is not the deposit guarantee scheme, which is a bank regime under the financial supervision act, and it does not carry that scheme’s fixed compensation entitlement. The two meet where the segregated money sits at a covered bank: article 29.02 treats a third party for whom a depositor holds in its own name under a contract or a statutory requirement as the depositor, guaranteed up to 100,000 euro per depositor per bank, if that third party can be identified before the decision that triggers the scheme. It answers the bank’s insolvency, not the institution’s, and does nothing for funds covered by an insurance policy instead or invested in low risk assets. A treasurer choosing between the two should understand that the question is not protected against unprotected, but which protection, delivered by which mechanism, in which insolvency.
The register question
Because the categories are licensed, they are checkable, and the check takes minutes. The central bank maintains public registers of payment service providers and electronic money institutions. The register records which payment services each provider may supply and with effect from which date, any restrictions imposed on those activities, and the country in which the provider has its registered office, and for an exempt payment service provider it states specifically that the provider is not subject to the central bank’s supervision. Its register of electronic money institutions adds that exempt institutions are supervised by the markets authority instead.
Two practical instructions follow from that. Check the entity you are actually contracting with, which is often a group company in a different member state rather than the brand on the website, and check what it is permitted to do rather than what the marketing says it does. Where the provider turns out to be exempt rather than licensed, that is not automatically disqualifying, but it changes what the arrangement is and should be recorded in the treasury policy as such.
A foreign IBAN is lawful, and that is not the end of it
Many of these accounts come with an account number issued in another member state. This is where founders meet a problem with a name. Under the European regulation establishing technical and business requirements for credit transfers and direct debits in euro, a payee accepting a credit transfer or using a direct debit to collect funds from a payer holding a payment account located within the Union must not specify the member state in which that account is to be located, provided the account is reachable. The mirror obligation applies to a payer making a transfer.
The rule is unambiguous and it is routinely broken, so consistently that the practice has acquired the informal label of IBAN discrimination. A payroll system refuses a non-domestic account. A utility declines a direct debit mandate. A customer’s accounts payable department states that it pays only into accounts of the same country. For a euro transfer or direct debit inside the Union, none of that is lawful, and none of it is fixed by knowing that it is unlawful when an invoice is due on Friday.
In one mandate we found the operating problem was not the bank refusal at all. It was a single large customer whose supplier onboarding tool rejected the account number and could not be overridden by anyone the client was allowed to speak to. The regulation was eventually decisive, but the route to it ran through a formal complaint rather than through the account manager, and it took longer than opening the account had.
What the tax authority accepts
The Dutch tax authorities do accept foreign account numbers, subject to conditions. The number must be that of a payment account and not a savings account, and it must carry the name of the individual or the undertaking as the bank holds it. An individual is directed to write in, enclosing identification and a bank statement or bank confirmation showing the name and the number, neither older than two months. A business files through the business portal, or writes if it has no access, and the paper form for entrepreneurs sends foreign numbers to that separate route rather than handling them itself.
Payment in the other direction is straightforward, since the tax authorities publish an account number and a BIC for payments from abroad, warning that they take longer and that arriving on time is the payer’s responsibility. The collection side is narrower than it looks, and how narrow depends on the tax. For income tax, reporting a new account number does not change the account used for the direct debit on the provisional assessment, which is arranged separately, online or on a mandate form requested by telephone, and only by telephone where the payer’s bank does not support the digital mandate. For corporation tax the online route does not yet exist: the direct debit on the provisional assessment for the current financial year cannot yet be arranged online, and the paper mandate form comes with the assessment. None of these pages says whether a foreign account can be used for that direct debit. Where a group relies on direct debit for provisional assessments, that is a question to put to the tax authorities rather than one to assume answered because refunds already move to the same account.
Payroll, suppliers and the practical friction
Employees are paid to their own accounts, so the company’s account number is not usually an obstacle there. The friction sits in the systems around payroll and procurement: pension administrators, payroll bureaux, leasing companies, insurers and public bodies, whose forms and validation rules were often built on the assumption of a domestic account. Each of these is soluble and each consumes a week, and they arrive one after another rather than together, so the disruption is spread across a quarter instead of being absorbed in a single push. The remedy is to inventory the counterparties that will need to hold the company’s account details before the account is opened, and to test the awkward ones early, while there is still time to choose a provider whose account number will not trigger the objection at all.
Landlords and tender processes are a different category, because what they want is frequently not an account but a bank guarantee or a bank reference, which is not among the services the register shows such a provider is permitted to supply. Where the Dutch operation will need a lease, a guarantee or a credit line, the workaround has a ceiling, and the group should know where that ceiling is before it signs anything that assumes a bank relationship exists.
Treating the workaround as temporary
Used deliberately, a licensed payment or electronic money institution solves the sequencing problem that causes most of the damage: it lets the entity receive money, pay suppliers, meet its tax obligations and start trading while the bank conversation continues. Used as a permanent answer, it quietly caps what the Dutch entity can do and leaves the original question unaddressed.
That question is almost always the same one. Banks decline files they cannot describe: an entity with no local decision maker, an activity that cannot be corroborated, an ownership chain with a layer nobody can explain. Six months of clean transaction history through a regulated payment institution is genuine evidence and improves a second application materially. Six months of the same thinness that produced the first refusal does not. The workaround buys time to fix the file. It is worth using it for that.
This article is informational and does not constitute tax, legal or investment advice. Each engagement is subject to scope and applicable regulation.