Dutch election: Rutte declares victory as Wilders' challenge falls short

12 noon UPDATE: Dutch Prime Minster Mark Rutte has declared victory over Geert Wilders’ challenge.

"This is a night for the Netherlands," Mr Rutte told crowds of supporters after the result from exit polls. "After Brexit, after the US election, we said 'stop it, stop it' to the wrong kind of populism."

In response, Mr Wilders tweeted: "PVV voters thanks. We won seats, first victory is in. Rutte hasn't got rid of me yet."

The polls show the PVV (Freedom Party) is tied for second place with two other parties.

On the left, the Green Left party has make big gains, while the PVDA (Labour), the outgoing partners in Mr Rutte’s coalition, are on course for an historic defeat.

11.00am UPDATE: The first exit polls say Prime Minister Mark Rutte's centre-right VVD Party has won the most seats in parliamentary elections at 31 out of 150 (41 in previous parliament).

This is way ahead of the next three parties, including Geert Wilders' anti-immigration Freedom Party (PVV), the Christian Democrats and the Democrats 66 Party, which each have 19 seats.

This is a gain of four for the PVV, seven for the D66 and six for the Christian Dems.

Voter participation in the general election was high with an estimated turnout of at least 81%. Analysts say a high turnout has benefitted pro-EU and liberal parties.

Earlier report:
The highly anticipated Dutch general election could set the tone for how anti-immigrant politicians will fare in key European polls later this year.

The Netherlands parliament is chosen by a party-list proportional representation system that results in unwieldy coalition governments.

Some two dozen parties are contesting the election with a low minimum threshold (the outgoing parliament has five parties with five or fewer members).

No party has ever achieved a parliamentary majority. To do so, a single party would need to secure 76 seats in the 150-member Lower House (Tweede Kamer, literally Second Chamber).

Polling closes at 9pm local time (9am NZ time) and manual counting continues until the seats are allocated.

A dozen parties are likely to have seats, with public opinion polls showing the two largest are likely to be Geert Wilders’ anti-Muslim, anti-EU Freedom Party (PVV) and Prime Minister Mark Rutte’s centre-right People’s Party (VVD), known as the Liberals.

Mr Rutte is promising business-as-usual while Mr Wilders' promises a range of actions from banning the Quran (Koran) and closing all mosques to pulling the Netherlands out of the European Union and closing the borders to refugees.

On the left, the two largest parties are Labour (PvdA), which is more centrist than the Socialists Party. Other parties include the conservative Christian Democrats, the Christian Union, the pro-business Democrats 66 and the radical Green Left.

Other parties shun Wilders
Most attention is on the Freedom Party, which most other parties have said they would refuse to join in a coalition.

A government is unlikely to be formed without at least four parties (People’s Party, Christian Democrats, Democrats 66 and the Greens).

Ruling out the People’s Party would require at least five parties (Christian Democrats, Democrats 66, the Greens, the Socialists and Labour).

Coalition-building is aided by the monarch’s appointment of a veteran politician (an informateur), typically from the largest party.

If the informateur is successful, the monarch appoints the leader of the coalition as the prospective prime minister (formateur), who then allocates ministerial portfolios.

The monarch then formally invites the formateur to form a government and appoints the ministers by royal decree, who then resign from parliament due to the separation of powers rules.

This is not a quick process and can take a number of months. The last general election, held on September  12, 2012, did not result in a new government until November 5. This took over four months to after the 2010 election and seven months in 1977.