Scarce business licenses in the Netherlands: top 5
Tops 5 of Scarce Business Licenses in the Netherlands
It is important for entrepreneurs doing business in the Netherlands to see when there are scarce permits. In that case, stricter rules apply, such as transparency and equal treatment in the distribution of these licences. From my experience I know it is very useful to consult a Dutch business lawyer for the distribution procedure of scarce permits in the Netherlands.
A scarce permit requires a transparent procedure in which potential candidates are given equal opportunities to compete for the permit. This means that the government must announce “in an externally identifiable manner” that a scarce permit is available and the period within which applications for that permit can be submitted. The distribution procedure must also be announced in good time in advance and it must be clear what requirements will be imposed on the applications. For some licences, the government deliberately chooses to issue only a limited number of licences. For example, for the Lotto and the Toto, a limited number of casinos, coffee shops, tour boats, beach pavilions, etc. The location for a fish stand is also limited in number, not to mention parking permits. For the enthusiasts I have made a top 5. Scarce rights like subsidies, gas and oil concessions and phosphate rights are not taken into account in this blog.
Licence gambling (Lotto, Toto, casinos, etc.)
- There are a number of games of chance that can only be licensed to one party. Thus, for the time being, there are legal monopolies for gambling and lotteries in the Netherlands. The current gaming licenses concern:
- The State Lottery
- The organisation of lotteries awarded to ‘The Lotto’
- Sports betting; licence granted to ‘Toto’
- The total amount of the deposit will be divided among those who have bet on the winner or on one of the prize winners (subject to any deductions permitted by or pursuant to the law).
- Stand lottery (granted to ‘The Lotto’)
- The casinos; Holland Casino (privatization legislation still to be adopted).
Dutch Gambling licence
The Dutch legal monopoly is controversial and is therefore the subject of considerable litigation and this is about to change for remote gambling permits. Especially foreign gambling companies have hired a lawyer to challenge the Dutch gaming licence distribution. For non-occasional charity lotteries such as the ‘Postcode Lottery’ there is an open system: no limit to the number of licenses. Article 3 of the Games of Chance Act stipulates that a licence application can be made for a lottery, the proceeds of which serve ‘some general interest’. By general interest it is meant, among other things: sport, social welfare, culture, health care or development work. The payment of the proceeds must amount to at least 50% of the sale of the tickets. At least 80 percent of the proceeds must go to charities with an Anbi status. Online gambling, for example sportsbetting, will be regulated in the Netherlands from mid-2020, making it no longer illegal. Under strict conditions, licences will be granted and online games of chance will be properly managed from mid-2020 onwards. For further reading check out: remote gambling license in the Netherlands.
Licensing of events (festivals, martial arts galleries, etc.)
A sector that has become lucrative in the Netherlands in a short period of time is the organisation of events, such as festivals. In 2017 there were more than 1000 music festivals. Liberation doll, Thunderdome, Pinkpop, Lowlands, Mysteryland and many other festivals have become an integral part of the entertainment offering in the Netherlands. This means that the competition is fierce and sometimes an organisation goes bankrupt. Dutch permits for a festival or event are often scarce. Scarcity is caused by the limited number of locations and the limited frequency of events by means of municipal policy. There is only limited space on the events calendar that Dutch municipalities have introduced. An event permit is always required for a festival in the Netherlands, but sometimes multiple permits are required, such as an environmental permit in connection with noise nuisance. The lack of a general framework with rules is difficult for entrepreneurs. Dutch municipalities have their own guidelines for fire safety, constructions, security, sanitary facilities, first aid, etc. A Dutch municipality is not obliged to issue a permit if you want to organize a pop concert in a local park for 2000 spectators. The municipality does not just have to make public space available for every initiative. Small outdoor events up to 100 visitors will often not be a problem. Usually a municipality has an event policy and an event calendar where an event can be fitted in. Due to the events policy, the number of available permits is limited, especially on certain public holidays and at certain locations (think of the Museumplein in Amsterdam), which is why the permit is scarce. An application for inclusion in an event calendar must therefore be submitted in good time.
Dutch real estate projects and project development: single permit
Permitting a lucrative construction project in the Netherlands requires endurance. This is often the game of project developers. Acquiring the land is important, because otherwise you have to rely on the government issuing (landlease) or selling the land, which means that the permit is scarce. The Dutch (local) government can also have a plan of its own, and this often involves work that is subject to the obligation to put out to tender and for which a tendering procedure must be followed. If the government owns the land and has no concrete plans of its own, a developer can try to use a plan to entice the municipality to sell the land to him or to issue it on a long term lease. In this situation, the government has two hats on, namely that of landowner and licensing authority. A permit for the construction project and an amendment to a zoning plan must be issued in accordance with the Dutch legal procedures. The legal framework is more limited for the sale of land or the issue of a long lease. The government acts in a private law capacity but is still a government body. This means, for example, that the land cannot be sold or leased at an unrealistically low price, which would constitute unlawful state aid. The success of a Dutch real estate project, regardless of the availability of the land, depends on the cooperation of the State as a licensing authority. Certainly in the case of projects that are politically “sensitive”, a permit can be refused and the judge has to adapt to this in order to determine whether the ground(s) for refusal of a permit are justified.
Licence for cannabis shops (Dutch coffeeshops)
Dutch Municipalities are free to decide whether to allow one or more coffeeshops in their municipality. There are municipalities where no coffeeshops are allowed (zero policy). In larger municipalities, the number of coffeeshops is usually limited, and in recent years the number of coffeeshops has even decreased. A municipality does not have to permit a coffee shop and can opt for a medium tolerance policy, a maximum policy or a policy of extinction. The coffeeshop must adhere to the tolerated criteria, which includes the requirement that there should be a maximum of 500 grams of cannabis in the coffeeshop (although it is allowed to top up to that amount each time). Entrepreneurs have been diving into this which has proven to be a good investment. The effective operation of a coffee shop is lucrative. The operator of a coffee shop, however, runs a serious risk. The maximum trading stock of 500 grams is only tolerated in the coffeeshop. Any stock located outside the coffeeshop is still punishable. The cultivation, production and transport of cannabis is not regulated in the Dutch tolerance policy. This means that the operator has to commit (temporary) offences in order to get his merchandise into the coffeeshop. This is called the “backdoor problem” of the tolerance policy. Outside the coffee shop, the intended stock can be seized and this happens regularly. The criminal courts in the Netherlands have realised that this is hypocritical and therefore no more punishment is imposed for so-called backdoor offences.
Hardly any municipality has a procedure for distributing a licence for coffee shops that meets the current standards under the Services Directive and administrative law. A transparent procedure will have to be introduced in all municipalities by means of a transitional period in order to create competition in the granting of licences, provided there is a maximum policy. This should not be a problem for existing coffee shop operators. You can read more about this subject in my book The Battle for Scarce Permits.
Dutch public space permit (beachclubs, bike/car sharing spots, stand permit, etc.)
By definition, public space in the Netherlands is limited. That is why it is necessary to fit and measure available parking spaces and to provide a place for a herring cart or food truck to operate as well. Bike and car sharing providers also need permits to use public space for their devices. And on the coast, locations for beachclubs are limited for all sorts of reasons. The competent government authorities are allowed to grant a permit and draw up a policy for this: beach bills, parking policy; policy on pitches, etc. The decision of the Council of State of 2 November 2016 (ECLI:NL:RVS:2016:2927) concerning a slot machine hall in Vlaardingen determines which rules apply in the event of a scarce permit. It follows from this ruling that the legal norm applies, which aims to ensure that in the event of the distribution of scarce licences by the board, (potential) candidates must in some way be given room to compete for the available licence(s). This legal norm is based on the principle of equality, which in this context aims to offer equal opportunities. In order to achieve equal opportunities, the licensing authority must ensure an appropriate degree of publicity with regard to the availability of the scarce permit, the distribution procedure, the application period and the criteria to be applied. The administration should clarify this in good time before the start of the application procedure, by publishing information on these aspects in such a way that potential candidates can become aware of them. In addition, the scarce permit may only be granted for a limited period of time.
Services Directive and licences applicable in the Netherlands
Specifically for the authorisation of services (hospitality, events, gambling activities, etc.) an EU directive has been drawn up, namely: the Services Directive. Thus, since 2010, only requirements and authorisation schemes for services that can be justified by overriding reasons of general interest, and that are necessary and reasonable, may be used. In addition, procedures and rules are to be simplified under the Directive. In the Netherlands, this Directive has been adopted in the Services Act. Many authorisation procedures for services do not yet meet the criteria of the Services Act. For this reason, for example, the authorisation system in the Municipality of Amsterdam for touring boats was taken to court. The permits procedure in Amsterdam failed the legal test of the Dutch Court and is now back on the drawing board.
For any questions about a business license in the Netherlands please do not hesitate to contact Mark van Weeren.