Baarle and other border towns: doing business when the line runs through the shop

When the border runs through the shop floor

Most borders are a line on a map and a sign on a motorway. In a few places on the Dutch–Belgian border they are a white cross on the pavement, a row of studs across a car park, or a line that passes between the till and the shelves. Baarle, a village in North Brabant, is the famous case: two municipalities in two countries, mixed together like a badly shuffled deck.

For tourists this is a photo opportunity. For a business it is a set of ordinary legal questions with unusual answers. Which register, which country taxes the profit, which VAT rate at the counter, which municipality grants the terrace permit, and which social security system covers the waiter who carries a tray from one country to the other?

This note answers them for owners of a shop, café, warehouse or office on or near the line, using Baarle as the core case. Figures come from our Benelux rates page for 2026.

Enclaves, counter-enclaves and the front door rule

Two municipalities, one village. Baarle-Nassau is a Dutch municipality. Baarle-Hertog is a Belgian municipality in the province of Antwerp. Baarle-Hertog is made up of 22 exclaves lying entirely within the Netherlands and a larger section, Zondereigen, on the Belgian mainland. Inside some of the Belgian exclaves sit seven pieces of Baarle-Nassau, Dutch counter-enclaves inside Belgian land inside the Netherlands. An eighth Dutch parcel, Vossenberg, lies inside Belgian territory near Zondereigen.

Origin. The pattern goes back to medieval feudal arrangements between the Lords of Breda and the Dukes of Brabant, who divided land parcel by parcel. When Belgium and the Netherlands settled their border after Belgian independence, the boundary treaty signed at Maastricht in 1843 could not agree a single line through Baarle and recorded the parcels as they stood. A dispute over two plots reached the International Court of Justice, which ruled for Belgium in 1959. The last parcel with unclear status, south of Ulicoten, was settled only in 1995.

The front door rule. Where the line cuts through a building, the address follows the front door. A house whose door opens on Belgian soil belongs to Baarle-Hertog; one whose door opens on Dutch soil belongs to Baarle-Nassau. About 170 structures sit on the border, some 90 of them homes. One house at Loveren has the line through the middle of its door and carries two house numbers, one in each municipality. Moving a front door now needs a building permit, which local reporting describes as hard to obtain.

Two sets of rules in one street. The spring of 2020 showed what this means in practice. Belgium closed non-essential shops in its lockdown; the Netherlands kept them open. A Zeeman clothes shop straddling the line could open only its Dutch half until Belgium allowed shops to reopen on 11 May 2020. The same split shows up every December: Baarle-Hertog has a cluster of fireworks shops because Belgian sales rules were more permissive than Dutch ones. From 1 August 2026 the Netherlands bans the sale of consumer fireworks to consumers and their use, apart from light F1 items, so a Dutch buyer leaving a Belgian shop takes home a product he may not set off.

What is shared. The two municipalities run a joint library and tourist office. Everything else, from waste collection to building permits, follows the address.

Law and practice: Boundary Treaty of Maastricht, 1843; ICJ, Case concerning Sovereignty over Certain Frontier Land (Belgium/Netherlands), judgment of 20 June 1959. Front door rule and building figures: Omroep Brabant, 18 September 2025. 2020 lockdown: NBC News, May 2020. Dutch fireworks ban: Rijksoverheid, 1 July 2026, and Ondernemersplein, 'Verkoop consumentenvuurwerk stopt'.

Register, company law, tax residence and permanent establishment

Register and company law follow the registered office. A company with its registered office at a Dutch address is a Dutch company: a B.V. under Book 2 of the Dutch Civil Code, registered with the KvK. A company with its registered office at a Belgian address is a Belgian company under the Code of Companies and Associations, usually a BV/SRL, registered in the KBO through an enterprise counter. Since its 2019 reform, Belgian company law uses the statutory seat theory, as Dutch law has long done, so the address on the deed decides.

Corporate tax residence can differ. The Netherlands treats a B.V. incorporated under Dutch law as resident for corporate tax, whatever happens in practice. Belgium taxes a company whose principal establishment or seat of management is in Belgium, and presumes, subject to proof, that a company with its registered seat in Belgium is resident. If the managing director of a Dutch B.V. lives two streets away on Belgian soil and takes decisions at the kitchen table, Belgium can argue that the seat of management is in Belgium. The 2001 Belgium–Netherlands tax treaty breaks that tie in favour of the place of effective management. Hold board meetings on the side of the registered office and keep minutes; see Dutch substance requirements.

Permanent establishment when the premises straddle the line. A fixed place of business through which the business is carried on is a permanent establishment. A Dutch B.V. whose shop, terrace, storeroom or workshop extends onto Belgian soil may therefore have a Belgian permanent establishment, and the reverse is true for a Belgian company. The profit attributable to that part is taxed in the other state and relieved at home. Belgium's domestic notion of an establishment is wider than the treaty one, so Belgian formalities can apply even where the treaty gives Belgium no tax.

The treaty in force. The 2001 treaty still governs. The treaty signed on 21 June 2023 still needs approval in the Netherlands and six Belgian parliaments; it will apply from 2027 at the earliest, possibly 2028.

Law and practice: Dutch Corporate Income Tax Act 1969, Article 2(4); Belgian Income Tax Code 1992, Article 2, §1, 5°; Belgium–Netherlands tax treaty of 5 June 2001, Articles 4, 5, 7 and 15; new treaty signed 21 June 2023, status per KPMG Meijburg Belgium–Netherlands newsletter, June 2026; PwC Worldwide Tax Summaries, Belgium, corporate residence.

VAT rates, place of supply, excise and cash registers

Place of supply. VAT does not care where the front door is. For goods sold without transport, the place of supply is where the goods are when they are handed over. For restaurant and catering services it is where the service is physically carried out. For goods shipped to a consumer in another Member State it is, above EUR 10,000 of such sales a year across the EU, the customer's country.

We found no published Baarle-specific VAT arrangement. Where the line runs through the counter, agree a consistent method, for instance by till, with both tax authorities in writing.

Excise and price gaps. National excise gaps on fuel, alcohol and tobacco drive border shopping. Individuals may carry excise goods bought duty-paid in another Member State for their own use; above the EU guide levels, such as 800 cigarettes or 110 litres of beer, customs may treat the goods as commercial.

Cash registers and invoices. Belgium requires many catering businesses to use a certified cash register system (GKS/SCE) with a fiscal data module. The upgraded GKS 2.0 is mandatory for new catering businesses from 1 July 2026; existing ones move over between 1 July 2027 and 1 January 2029, depending on when they bought their current system. The Netherlands has no comparable requirement. Belgian VAT-registered businesses must send and receive structured e-invoices through Peppol for domestic B2B sales since 1 January 2026; see our note on Belgian e-invoicing. Our notes on Dutch VAT registration and Luxembourg VAT registration cover the filings.

Law and practice: VAT Directive 2006/112/EC, Articles 31, 33, 55 and 59c; Belastingdienst, 'Btw-tarief logies' (21% from 1 January 2026); Belgian rate changes from 1 March 2026 per Bird & Bird, 2026; Directive (EU) 2020/262, Article 36 (guide levels); FPS Finance, certified cash register system and GKS 2.0 transition dates; Belgian law of 6 February 2024 on structured e-invoicing.

Social security, payroll, personal tax and property

Social security follows the work, not the door. Under Regulation (EC) No 883/2004, a person working in one country is insured there. A person who normally works in two or more Member States is insured in the country of residence if at least 25% of working time or pay is there. Below 25%, the rules look at the seat of the employer or employers. The competent institution issues an A1 certificate. An employer whose employee is insured in the other country must register with that country's social security institution and pay contributions there: in Belgium the RSZ/ONSS, in the Netherlands through the Belastingdienst payroll channels.

The EU framework agreement on telework, signed by both countries, lets employees working from home in their country of residence for 25% to under 50% of their time stay in the employer's system. It covers home working, not a second shop.

Wage tax follows the place of work. Under Article 15 of the 2001 treaty, employment income is taxed where the work is done, subject to the usual 183-day exception for short visits paid by a foreign employer. The country of residence taxes worldwide income and relieves the foreign part. Our notes on Dutch personal income tax and Belgian personal income tax set out the 2026 brackets: up to 49.50% in the Netherlands, up to 50% plus municipal surcharge in Belgium.

Property taxes. Dutch real estate bears the municipal OZB, based on the WOZ value; Belgian real estate bears the onroerende voorheffing, based on cadastral income, with municipal and provincial surcharges. A split building is taxed in both.

Law and practice: Regulation (EC) No 883/2004, Articles 11 and 13; Regulation (EC) No 987/2009, Article 14; Framework Agreement on cross-border telework, in force since 1 July 2023; Belgium–Netherlands tax treaty 2001, Articles 15 and 23; Dutch Municipalities Act, Article 220 (OZB); Flemish Tax Code (onroerende voorheffing).

Putte, Koewacht, Eijsden, Kerkrade and Martelange

Baarle is the extreme case, not the only one. Here the line runs through built-up areas too, and the same questions arise in milder form. Koewacht, split between Stekene and Lokeren in Belgium and Terneuzen in the Netherlands, is another.

Putte. The village is split between Kapellen in Belgium and Woensdrecht in the Netherlands, with the border running through the streets. Dutch-side shops live on Belgian customers. In May 2020, when Belgium closed the border during the pandemic, the local business association said shopkeepers depended on Belgians for about 80% of their turnover. The flow runs both ways: in 2024 NOS reported that about a third of the Dutch part's nearly 4,000 residents were Belgian, drawn by Dutch mortgage rules.

Eijsden and Visé. Here the border itself moved. The Meuse had been straightened decades ago, leaving peninsulas of one country attached only to the other. A treaty signed on 28 November 2016 swapped them with effect from 1 January 2018: the Netherlands gained the Presqu'île de l'Illal and the Presqu'île d'Eijsden, 16.37 hectares, and Belgium gained Petit-Gravier, 3.09 hectares.

Kerkrade and Herzogenrath. On the Dutch–German border the line runs down the middle of Nieuwstraat/Neustraße. Until 1993 a knee-high wall divided the road. The two towns now cooperate as Eurode, and the Eurode Business Center was built across the border, with, as German official media note, the men's toilets in Germany and the women's in the Netherlands.

Martelange and Rombach. On the Belgian–Luxembourg border the N4 runs between Belgian Martelange on the west side and Luxembourg's Rombach on the east. The Luxembourg side is lined with petrol stations and tobacco, alcohol and coffee shops, thanks to lower Luxembourg excise and VAT. Our note on Belgian residents with a Luxembourg company covers the corporate side of that border.

Law and practice: Omroep Brabant, 12 May 2020; NOS, 10 March 2024; VRT NWS, 21 March 2025 (Koewacht); Treaty between the Netherlands and Belgium on the adjustment of the border in the Meuse, 28 November 2016 (Trb. 2017, 199), VRT NWS, 30 December 2017; deutschland.de on Eurode; Luxembourg VAT rates per the Benelux rates page.

Check your position on the line

Our practical list for any business on or near the border:

• Fix the address. Where is the front door and the registered office? That decides the register, company law and municipality.
• Map the floor. Which parts of the premises, terrace, storage and parking are on which side? Each regular use on the other side is a possible permanent establishment.
• Register for VAT where you supply. Separate tills or a written allocation method; a second VAT number if you supply on both sides.
• Check the till and the invoices. Belgian certified cash register for catering; Peppol e-invoicing for Belgian B2B sales.
• Map the staff. Where each person works, and for how much of the time; apply for A1 certificates.
• Insurance and bank. Liability and property cover that names both addresses; a bank that accepts the company's country of registration.

Now describe your business. The checker simplifies the rules above; it is general guidance, not a ruling.

Business on the Dutch–Belgian border: frequent questions