The Parliament, the Council of State, and the Supreme Court of the Netherlands all reside in The Hague making it the seat of government. When the Republic of the United Netherlands was founded in 1588 the government was moved to The Hague, as Amsterdam was still loyal to the Spanish/Burgundian Empire and was thus unsuitable for the government.

As Amsterdam is the largest and most prominent city in the Netherlands it was declared the capital in 1814, and codified as such in the Dutch Constitution. However, all government activity takes place in The Hague.

More Info: en.wikipedia.org