Netherlands - Country Commercial Guide
Digital Economy
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Digital Economy Overview

Everyone participates; that is the fundamental principle of the Dutch digitalization strategy. The Netherlands is a leader in digitalization, focused on five key elements: accelerating the digital transition in the SME sector; promoting digital innovation and skills; creating favorable conditions for effective digital markets and services; maintaining and strengthening secure, reliable, and high-quality digital infrastructure; and enhancing cybersecurity.

The Netherlands is closely aligned with the digital decade targets set by the European Union for 2030 and ranked third out of the 27 EU member states in the 2022 Digital Economy and Society Index.

Digital Infrastructure:

  • High-Speed Connectivity: The Netherlands is renowned for its advanced digital infrastructure making it rank second in the world for online connectivity, with 98 percent of households having a broadband connection. It has some of the highest broadband speeds in Europe, with extensive fiber-optic networks ensuring reliable and fast internet access across the country. The WEF global competitive index ranks the Netherlands third in the world for technological readiness.
  • Data Centers: The country is a major hub for data centers as several internet cables come to shore in the Netherlands. Amsterdam being one of the key data center locations in Europe. These data centers support a wide range of digital services, including cloud computing, data storage, and hosting. Because of the energy shortage, there is a stop in building new data centers in the Netherlands.

Digital Services and E-Commerce:

  • E-Commerce Growth: The Dutch e-commerce market is robust and fairly mature, with significant growth in online retail. The market is dominated by local players such as Bol.com, Coolblue, and Wehkamp, but Amazon is also active in the Netherlands. The rise of e-commerce is supported by high internet penetration and a digitally savvy population.
  • Digital Payments: The Netherlands has a well-established digital payment infrastructure. iDEAL is a Dutch payment solution with a 70 percent market share for online purchases. while credit cards only account for 8 percent. This system is unique to Dutch banks and will potentially be replaced by a EU system in several years.

Tech and Innovation Ecosystem:

  • Startup Scene: The Netherlands, particularly Amsterdam and Eindhoven, has a vibrant startup ecosystem and ranks 13th in the Global Startup Ecosystem Report by Startup Genome. The country supports tech startups through accelerators, incubators, and venture capital funding. Notable areas of innovation include fintech, health tech, and artificial intelligence. The 
  • Research and Development: Dutch institutions such as Delft University of Technology and the Netherlands Organization for Applied Scientific Research (TNO) drive innovation in various tech fields, fostering collaboration between academia and industry. Expenditure on R&D in the Netherlands has been around 2.3 percent of the country’s GDP and is like to go towards three percent in the future.

Government and Policy:

  • Digital Strategy: The Dutch government has a comprehensive digital strategy aimed at enhancing digital infrastructure, promoting innovation, and improving digital skills across the population. Key initiatives include the Digital Infrastructure Program and policies supporting smart cities which promotes education, knowledge and innovation, fast and open infrastructure, security and confidence, scope for enterprise, and digitalization of industry, healthcare, energy, and mobility.  
  • Regulation and Compliance: The Netherlands enforces strong regulations regarding data protection, aligned with the EU General Data Protection Regulation (GDPR). The country also engages in shaping EU digital policies and standards.

Digital Skills and Workforce:

  • Education and Training: The Netherlands emphasizes digital skills development through educational programs and vocational training. Institutions offer specialized courses in tech fields such as software development, cybersecurity, and data science.
  • Talent Pool: The country is known for its skilled workforce with strong work ethics. With a very high level of English speakers, this is an ideal country for foreign companies to setup operations. The current Dutch government is limiting the number of foreign employees and there is a shortage of labor, this makes access to talent a challenge for many companies.  

E-Government and Digital Services:

  • Government Services: The Dutch government has made significant strides in digitalizing public services, offering a range of e-government services that streamline interactions between citizens and government agencies.
  • Digital Identity: The country uses advanced digital identity systems, such as DigiD, which allows citizens to access a variety of online services securely.

Cybersecurity and Data Protection:

  • Cybersecurity Initiatives: With the growing importance of digital infrastructure, the Netherlands has robust cybersecurity measures in place. The National Cyber Security Centre (NCSC) plays a key role in protecting critical infrastructure and responding to cyber threats.
  • Data Protection: Compliance with GDPR ensures that data protection and privacy are priorities for Dutch businesses and organizations. The “Autoriteit Persoonsgegevens” (Data Protection Authority) oversees enforcement and provides guidance on data protection practices.

International Trade and Relations:

  • EU Integration: As a member of the European Union, the Netherlands benefits from the single digital market, which facilitates cross-border digital trade and services within Europe.
  • Global Connectivity: The country’s strategic location and advanced infrastructure position it as a key player in global digital trade and international tech collaborations.


Market Challenges

Data privacy:

Data privacy is important in the Netherlands, and to prevent any abuse of personal data, the Personal Data Protection Act came into force. The Act regulates what data can and cannot be used for. To enforce the Act, the Dutch government introduced the Data Protection Authority; this governing body ensures everyone complies with the law.

In 2016, the regulation was amended by the Data Breach Notification Act. This amendment requires that when a company or government body experiences a data breach, it must be reported immediately to the Dutch Data Protection Authority. In some cases, the company or government body is also obliged to inform the affected individuals. However, not every data breach needs to be reported to the Data Protection Authority. The law requires notification only if the breach is likely to lead to significant adverse effects on the protection of personal data or if it has already caused serious harm.

Data privacy is regulated and protects the people in the Netherlands. Therefore, it is important to keep innovating in this area, with the goal that citizens are more in control of their own data. In general, the Netherlands and the European Union have more strict data privacy policies than the United States and therefore it is crucial for U.S. companies to conduct diligent research to comply with the law.

AI regulation:

The Netherlands approved the EU AI Act on May 1, 2024. It seeks to create a regulatory framework that ensures the safe and ethical development and deployment of AI technologies, fostering innovation while protecting fundamental rights and safety. It applies to AI systems used within the EU, regardless of where the AI provider is based. It covers a wide range of AI applications, from high-risk systems to lower-risk uses. The Act officially went into effect throughout the EU on August 1, 2024, and will be fully applicable in 24 months. To implement the AI Act in the Netherlands, the government has established new administrative bodies, including an AI agency to enforce the new regulations. Additionally, a scientific panel consisting of independent experts will support the enforcement of the Act. It believes AI can pose risks and therefore, AI systems that present unacceptable threats, such as behavior manipulation, will be banned entirely. AI systems posing limited risks will face minimal transparency obligations, while high-risk systems will be required to comply with stringent requirements and obligations to enter the EU market. These measures and regulations by the European Union and the Netherlands are designed to ensure a safe and reliable AI system for the whole internal market of the EU.

Cross border data flows:

Cross-border data flow in the Netherlands is regulated by the European Union through the 2018 framework for the free flow of non-personal data. This regulation allows companies to store non-personal data wherever they choose, makes data available for regulatory control, and aims to facilitate the transition between cloud services. However, data flow must comply with cybersecurity legislation. Personal data flow is regulated trough the General Data Protection Regulation, this ensures free flow of personal data in the EU, but also protection when it leaves a regions border.

The EU and the U.S. established the EU-U.S. Data Privacy Framework to facilitate transatlantic commerce by providing U.S. companies and organizations with reliable mechanisms for transferring personal data. Similarly, the EU has formed agreements with other countries outside the EU, including Japan in 2023 and China as of August 27, 2024.

Cybersecurity:

Over the years, various developments have posed significant threats to society and the economy in the Netherlands and the EU, including the war in Ukraine, COVID-19, and cyber threats. In response, the EU introduced the Network and Information Security Directive (NIS2) in 2020. In the Netherlands, this directive will be incorporated into national cybersecurity law, replacing the previous legislation based on the old NIS directive. The Dutch government is currently transitioning this into national law and is in the consultation period with citizens, companies, and government bodies for feedback. The law is expected to come into effect in 2025.

In 2019, the government introduced the National Cyber Security Agenda (NCSA), which outlines seven key objectives to enhance cybersecurity:

  1. Develop sufficient digital capabilities to detect, mitigate, and respond effectively to cyber threats.
  2. Contribute to international peace and security in the digital domain.
  3. Position the Netherlands at the forefront of developing secure hardware and software.
  4. Ensure resilient digital processes and maintain robust infrastructure.
  5. Establish effective defenses against cybercrime.
  6. Lead in the development of cybersecurity knowledge.
  7. Implement a strong, integrated public-private approach to cybersecurity.

Additionally, the Dutch government established the National Cyber Security Centre (NCSC). This center combines tactical and operational knowledge and expertise from both the government and business sectors. Its goal is to better understand threats and developments, respond more effectively to incidents, and make faster decisions during emergencies.

Online harms regulation:

To prevent illegal and harmful activities, the EU introduced the Digital Services Act, which came into force for all platforms on February 17, 2024. The Act establishes a set of rules for providers of digital services, business users of digital services, and citizens. It includes regulations to protect the fundamental rights of citizens, aims to enhance protection for children online, and seeks to reduce exposure to illegal content.

The Netherlands has not yet enforced the DSA due to delays by the government. The Dutch Authority for Consumers and Markets (ACM) and the Personal Data Authority (AP) have been designated as the Digital Services Coordinator; however, they are experiencing delays because the Dutch draft bill for the Digital Services Act is not ready. The Ministry of Economic Affairs stated that the DSA impacts various areas and interests of many different parties. For this reason, the DSA could not be implemented within the fifteen months prescribed. The current legislation that regulates online harms is the Dutch Media Act of 2008, which includes provisions related to broadcasting and online media. The Act addresses issues of pluralism and aims to protect minors, setting certain standards for online media. There has been no prognosis yet on when exactly the DSA will be fully implemented.

Standards development:

The Netherlands holds a prominent position as a digital hub, and the government aims to further strengthen this position. One key element proposed by the government is that digital infrastructure should facilitate the energy transition. Additionally, the government seeks to align it with broader goals of a sustainable and circular economy.

Subnational market regulation:

The European Union established a framework in the Digital Marketing Act (DMA). This regulation identifies “gatekeepers,” such as search engines, app stores, and messaging services, and requires them to comply with the obligations and prohibitions outlined in the DMA. The regulation has been in effect in the Netherlands since 2023. Following these regulations, the Netherlands plans to keep their position as digital hub.

Tight ICT labor market:

The Netherlands faces a shortage in skilled ICT employees, and this is not expected to solve itself anytime soon. The higher demand for ICT employees also led to higher turnover rates which results from significant salary increases when employees changed to a new employer. About 40 percent of ICT companies experience shortage of personnel as a restraint on the possibility of growth.  

Digital Trade Barriers:

Digital trade barriers in the Netherlands arise from regulations implemented by the European Union. Legislation such as the Digital Markets Act, the Digital Services Act, the Data Act, the European Data Governance Act, and the EU AI Act contributes to a more regulated digital trade environment. Examples of these barriers include restrictions on cross-border data flows, customs duties on electronic transmissions, and digital taxation measures such as value-added tax. Compliance with complex EU regulations can be challenging for businesses, especially those operating across multiple countries can be challenging. And navigating Dutch-specific regulations in addition to EU-wide rules can create a complex regulatory environment for digital trade.

Most laws are set at the EU level. The Digital Economy Chapter of our Country Commercial Guide for the European Union provides a more comprehensive overview.

Market Opportunities

Demand continues to rise for teleworking software, teleconferencing software, mobile software, cloud-based software, and networking software. At the same time, cyber security solutions have become increasingly important and there is a growing demand for network security products, intrusion detection, and prevention products.   

Additional leading sectors include augmented and virtual reality, artificial intelligence, storage management software, Customer Relationship Management (CRM), Enterprise Resource Planning, application management, and content management products. VR gaming software for the consumer market is also expected to offer good prospects in the coming years.

Artificial Intelligence:

Artificial intelligence (AI) presents opportunities for the Dutch market and economy. The government expects an increase in worker productivity and efficiency across various sectors, such as healthcare and education. It is also crucial to invest in AI for SMEs (small and medium-sized enterprises) to ensure they remain competitive and up to date with the latest innovations.
Generative AI holds promising prospects for the Netherlands. It is anticipated that, with widespread adoption of Generative AI, the country’s GDP could increase by $85 billion over the next decade. Institutions like the EIASI at the Technical University of Eindhoven are focused on advancing AI development to facilitate its immediate application in the real world.

  • NL AIC: The NL AIC, a coalition emphasizing energy and sustainability with Artificial Intelligence, views AI as a cornerstone for innovation aimed at reducing energy consumption and creating positive climate impacts. The government also plans to leverage AI for labor market analysis, including productivity, quantity, and quality of work, in collaboration with the Social and Economic Council (SER). To ensure effective use of AI, the Dutch government is committed to promoting AI training and education.
  • AINed: The Netherlands is working to establish a secure and accessible national AI testing facility, AINed. Partly funded by the National Growth Fund, AINed aims to foster public-private partnerships for the implementation of generative AI applications. The program will facilitate essential advancements that are of significant economic and social importance.
  • GPT-NL: Another initiative by the Dutch government is the creation of an open model called GPT-NL. This model will provide insight into AI mechanisms and the rationale behind AI-generated conclusions. The program will be available to partners interested in contributing to or developing AI solutions. GPT-NL is designed to support research at academic and government institutions and to reduce dependence on commercial entities. The development of GPT-NL will occur in two phases: the first year (2023) will focus on model development in collaboration with academic institutions, while the second phase will center on its deployment and integration with Snellius, the National Supercomputer.

The market size for Artificial Intelligence (AI) is projected to reach $1.92 billion in 2024, with an expected annual growth rate of 28.56 percent. This growth is anticipated to drive the market volume to $8.67 billion by 2030. Current trends in the AI industry include increased adoption in healthcare, enhancements in customer support and service, and advancements in AI chip development. Additionally, AI is becoming more integrated with other technologies, such as the Internet of Things (IoT) and blockchain, which is expected to further boost the industry’s growth

Data Analytics:

In the Netherlands, data analytics is employed across various sectors, including finance, healthcare, and transportation, to optimize operations and create new business opportunities. For example, Dutch law enforcement agencies use data analytics for frontline policing, criminal investigations, and intelligence gathering. Data is also utilized to calculate optimal shipping routes, minimize fuel consumption, and ensure timely delivery of goods. Additionally, data analytics is applied in sports, such as football, where the top Dutch leagues use it to enhance player performance.

Cloud Computing:

The Netherlands boasts a robust cloud computing sector, with numerous providers offering a wide range of services to meet various industry needs. Thanks to its strong technological infrastructure and widespread adoption of cloud computing, the market is thriving. Government regulations that favor the industry further bolster market growth by helping providers build user trust. Additionally, the Netherlands is known for being an early adopter of new innovations. Its geographical location is beneficial, offering low-latency access to major European markets. The country is also well-connected internationally, with major transport hubs including Schiphol Airport and the port of Rotterdam.

The revenue of the cloud computing market in the Netherlands is projected to reach $11.66 billion in 2024, with an expected annual growth rate of 17.22 percent. This growth is anticipated to drive the market volume to $25.81 billion by 2029. One notable trend is the increasing number of businesses shifting their operations to the cloud to benefit from greater flexibility and cost savings. The Dutch cloud computing sector is dominated by mainly larger U.S. companies.  

Internet of Things (IoT):

IoT is expected to reach $7.67 billion by 2024, according to statistics. The most dominant sector within the IoT market is the automotive sector, with a market volume of $200 billion in the same year. The Compound Annual Growth Rate (CAGR) for the period from 2018 to 2028 is projected to exceed 16 percent. The Netherlands is also experiencing growth in its IoT market, driven by investments in 5G networks and an expanding cloud computing sector.

Quantum Technologies:

Quantum technologies are crucial as Europe aims to lead in the second quantum revolution. To support this goal, the EU introduced the Quantum Technologies Flagship (QTF) initiative in 2018. This long-term research and innovation program is designed to support hundreds of quantum researchers over a period of ten years. The QTF funds projects in four key areas: quantum computing, quantum simulation, quantum communication, and quantum sensing and metrology.

The quantum technologies market is valued at several billion dollars and is expected to experience strong growth over the next decade, with an annual growth rate of approximately 20 percent to 30 percent. In the Netherlands, the national strategy for quantum technologies is being advanced through the Quantum Delta NL program. This initiative is designed to foster innovation in quantum technologies and enhance international collaboration. It aims to build a collaborative ecosystem by bringing together scientific institutions, students, businesses, and professionals.

Financial Technologies:

The fintech industry is evolving rapidly in the Netherlands, with several key hubs playing a significant role. Amsterdam is a major center for the financial sector, Rotterdam is known for its trade sector, and Delft and Eindhoven are prominent for their technological universities. The Netherlands has a rich history in financial technology development, beginning with the introduction of the first cash machine in 1978, the adoption of debit card payments in 1990, and the launch of iDEAL in 2005, which was the first technology to enable user-friendly online payments. IDEAL is still the most used online payment method in the Netherlands, with a usage of 97 percent in 2023.

To further stimulate the fintech industry, the Ministry of Finance introduced a fintech action plan, developed after a survey revealed that the Netherlands is well-positioned for fintech growth. The action plan focuses on three key areas: First, to enhance the visibility of the Dutch fintech climate and sector both nationally and internationally; second, to ensure that fintech companies have access to knowledge and talent; and third, to make sure that legislation is future-proof and supports innovation.
Currently, the market size is valued at $4.42bn, with an expected grow at a CAGR of 2.3 percent from 2024-2028. In 2030 the market is expected to reach the total value of $5.18bn.

Key fintech players in the Netherlands include:
-    Adyen 
-    Bunq
-    Mollie
-    Orange Bank

Cybersecurity:

The cybersecurity market has grown significantly since 2016, increasing from $83.32 billion to $166 billion in 2023. This growth is attributed to the rising importance of cybersecurity amid rapid digital innovation. The COVID-19 pandemic highlighted the vulnerabilities of remote work, leading many organizations to experience more cyberattacks. Although the crisis has subsided, the cybersecurity market is expected to continue growing rapidly.

Smart Cities:

The Smart Cities strategy was introduced in 2017 by several large and smaller cities in the Netherlands to former Prime Minister Mark Rutte. The strategy aims to improve the quality of life in Dutch cities, foster innovative solutions, and enhance international competitiveness. Amsterdam Smart City is one of the key initiatives supporting the national Smart City Strategy. It serves to bring together innovation professionals from government, civil society, businesses, and research institutions. The initiative focuses on shaping the future by addressing various themes such as energy, mobility, and the circular economy. Amsterdam Smart City provides people with meeting places and (online) workspaces.

Main Trade Shows in the Netherlands:

Helpful Resources: