Company set-up

Various avenues of approach exist in setting up a company in The Netherlands. For international companies wanting to set up an operation, the two most commonly used ways of doing so is by setting up a:

  • Dutch legal entity (a Besloten Vennootschap is most commonly used)
  • Branch office of the foreign legal entity

Our professionals are experienced in setting up both branch offices and Dutch legal entities companies for our clients. We take care of notary work, intermediate in opening a bank account. assist in registering at the Chamber of Commerce and apply for the company’s VAT and other tax numbers.

Should you desire to set-up a Besloten Vennootschap please note that we will provide you with provide an English translation of the Articles of Association (BV) and an English extract of registration at the Chamber of Commerce (both BV and branch office).

Please note that all entities come with their own advantages and disadvantages. A non-exhaustive listing of highlight per entity type is provided below.

Dutch legal entity – Besloten Vennootschap (B.V.)

  • Carries limited liability for its shareholders
  • Starting up losses will likely not be tax deductible for its shareholders
  • Corporate tax is levied on its worldwide income (tax treaties eliminate double taxation)
  • Profit distributions are taxed with dividend withholding tax
  • EU parent-daughter directive and tax treaties usually provide exemption
  • At least 1 director
  • Financial statements filing requirements are applicable (limited version once per year)

As of October 1, 2012 the Flex BV Act has decreased the complexity of the set-up procedure and simplified the statutory rules governing the “BVs” and offer a large degree of flexibility in the governance structure of this type of company.  The rules on capital protection and the protection of creditors have become more flexible:

  • The requirement of a minimum share capital of EUR 18,000 is abolished. It is sufficient if at least one share with voting rights is held by a party other than the BV or (if any) a subsidiary of the BV.
  • The requirement that a bank statement be submitted when shares are paid for in cash upon a BV’s incorporation is abolished.
  • In the event of a non-cash contribution for shares, it is no longer necessary to submit an auditor’s statement. However, where such a contribution is made by a founder or management board member of the BV, a description of the contribution still has to be provided. Management board members will still be obliged, under Article 2:9 of the Netherlands Civil Code (NCC), to ascertain that the value of the contribution is at least equal to the payment obligation.
  • BVs will be allowed to denominate their share capital in a currency other than the euro.
  • It is longer be necessary to specify the company’s authorised capital in the articles of association. The requirement that at least one-fifth of the authorised capital be issued is also abolished.
  • There is more freedom to make agreements on when the share capital must be paid up.
  • The “nachgründungsregeling” in Article 2:204c NCC (which imposes additional requirements on transactions entered into between a BV and a founder or shareholder within two years of the BV’s initial registration in the trade register) has disappeared.
  • The current rules on the provision by a BV of financial assistance to third parties for the purchase of shares in the company’s own capital (Art. 2:207c NCC) are abolished.
  • Various restrictions on a BV’s ability to buy back its own shares are abolished.
  • The procedural requirements that must now be met to reduce a BV’s capital are abolished.
  • Certain restrictions on the payment of dividends and the distribution of reserves will be lifted.

The new rules on distributions to shareholders are as follows:

  • The basic principle is that decisions to make a distribution must be approved by the management board, which must refuse to grant its approval if it knows or should reasonably foresee that, after making the distribution, the BV will be unable to continue paying its due and payable debts. If, after making a distribution, the BV is unable to continue paying its due and payable debts, the management board members who at the time of the distribution knew or should reasonably have foreseen this will be jointly and severally liable towards the BV for compensation of the shortfall resulting from the distribution, plus interest at the statutory rate calculated as from the date of the distribution.
  • A party that receives a distribution when he/it knows or should foresee that the BV will be unable to continue paying its due and payable debts after making the distribution will be liable towards the BV for compensation of the shortfall resulting from the distribution. The maximum compensation payable by the recipient will be the amount or value of the distribution received by him/it, plus interest at the statutory rate calculated as from the date of the distribution.
  • Similar rules apply to share buybacks and capital reductions.

The rules on decision making within a BV are relaxed:

  • It is now possible to pass resolutions without a meeting being held, provided that all persons with meeting rights have consented (electronically or otherwise).
  • It is now possible to hold shareholder meetings outside the Netherlands.
  • It is now considerably easier to tailor the allocation of voting rights to individual shareholders. The company will be able to issue shares bearing multiple votes, which could be particularly useful in the case of joint ventures and family-owned companies.
  • It is now possible to issue shares without voting rights.
  • It is now possible to issue shares without a right to share in the profits.

Branch office of a foreign legal entity

  • Easy to set up and to close down
  • Considered to be a department of its owner yet treated as a separate taxable entity in The Netherlands
  • Starting up losses will likely be tax deductible in the owners home country
  • Profit transfer to its home country is tax exempt
  • Corporate taxes are levied over its activities in the Netherlands
  • All registered directors of the owner in the home country are required to register at the Dutch Chamber of Commerce
  • The owner is required to file its financial statements at the Dutch Chamber of Commerce if the owner has filing obligations in its home country
  • Carries unlimited liability for its owner concerning its debts to third parties

Dutch legal entity – Naamloze Vennootschap (N.V.)

A Naamloze Vennootschap (N.V.) is a public limited company and still operates under roughly the same rules as the B.V. before the Flex B.V. Act. An NV has a higher minimum capital requirement of EUR 45,000. An N.V. is the legal structure of choice for stock listed companies; however there are also many non-listed N.V. companies currently in existence.

Dutch legal form – Commanditaire Vennootschap (CV) and Vennootschap onder Firma (VOF)

A CV is a partnership involving “silent” partners carrying limited liability and providing financial means but having no management-involvement and “executive” partners exposed to unlimited liability who manage the company.

Unlike the CV a VOF is a partnership where all partners are liable towards creditors of the VOF.

The partners in a CV or VOF may be (foreign) legal entities or private persons or a combination of these types. The Dutch Revenue Agency usually considers a CV or VOF to be transparent taxwise. This means that the partners in a CV or VOF are taxed for their share in the result. Dutch legislation does not require a CV and VOF to have Articles, it is however strongly recommended to make Articles regulating the cooperation between the partners. In some cases foreign companies engage in operations the Netherlands with a Dutch business partners using the CV or VOF construction.

Dutch legal form – Eenmanszaak

An Eenmanszaak (Sole proprietorship) is a form widely used by private entrepreneurs, who operate their company for their own account. The owners are exposed to unlimited liability regarding creditors. The Netherlands has several tax benefits for proprietorships. Due to its nature the Eenmanszaak is not suited for the needs of foreign companies interested in engaging in an operation in the Netherlands.

Dutch legal form – Coöperatie

A Coöperatie (Cooperative) is a legal structure originally intented to facilitate entrepreneurs to cooperate in setting up an activity for their mutual benefit. The Coöperatie’s profits are taxed at the Coöperatie level if members are legal entities. The COOP can however transfer its net profits free from taxes to its members (legal entities). An important condition is however that the members/legal entities are active companies; otherwise the profit distributions will become taxable with corporate tax. Therefore, using a COOP in a construction requires a good advice from a tax expert.