General tax compliance requirements for a company
A private limited company, or in Dutch a besloten vennootschap (bv), is a business structure with legal personality. This means that the bv is generally speaking liable for any debts, rather than you as an individual. A Dutch BV can be set up with one individual/legal entity as the only director/major shareholder (DGA).
A private limited company’s equity is divided into shares that are owned by shareholders. They also hold ultimate power, but the company directors run the business on a day-to-day basis. A private limited company may appoint a supervisory board to monitor its board of directors (two-tier board), or the supervisors may be part of the board of directors (single-tier board).
In smaller BVs, the director is often also the only shareholder. In which case, he or she is then director and major shareholder, in Dutch directeur en grootaandeelhouder (DGA). You can also opt to have more directors, to share the responsibilities. There is no legal requirement to the number of directors for BVs.
A Dutch bv is required to maintain accounting records that are sufficiently adequate to determine the financial position of the company at any time. There are various regulations, including civil and tax regulations, stipulating the period for which the records should be retained. As a general rule, the records must be kept for a period of seven years.
The Dutch accounting rules are regulated by law. The Dutch Generally Accepted Accounting Principles (Dutch GAAP) are mainly based on EU directives. The Dutch GAAP applies to a BV and NV as well as other entities, like for example certain forms of partnerships.
The Dutch accounting rules are regulated by law. The Dutch Generally Accepted Accounting Principles (Dutch GAAP) are mainly based on EU directives. The Dutch GAAP applies to a BV and NV as well as other entities, like for example certain forms of partnerships.
Similarly, the appointment of directors needs to be documented carefully, and the company is responsible for withholding taxes on salaries of personnel.
Statutory bodies in a corporation in accordance with Dutch corporate law
A Dutch BV has two statutory bodies: the board of directors and the general meeting of shareholders.
CONVENING OF A GENERAL MEETING UNDER DUTCH LAW
As mentioned above, the general meeting exercises its powers by passing resolutions or taking decisions. Resolutions must be passed by an absolute majority of votes, unless otherwise provided. The articles of association may provide that electronic voting may also be carried out prior to the general meeting.
The general meeting of shareholders has many different powers, which are granted to it by law. Examples include the appointment and dismissal of directors, the approval of annual accounts, amendments to the articles of association and the issue of company shares. The articles of association may also confer other powers on the general meeting.
FORMALITIES FOR CONVENING A GENERAL MEETING OF SHAREHOLDERS
The formalities for properly convening a general meeting are very different for the Dutch BV (besloten vennootschap) and the NV (naamloze vennootschap). In this article, we will only discuss the bv. It is a legal requirement that the general meeting is convened at least once a year. In principle, the board of directors and the supervisory board have the power to do so, but the articles of association can give this power to others.
In the case of a BV, one or more members representing at least one hundredth of the issued capital may request the management board or supervisory board to convene a general meeting of members. The partners’ meeting is convened by means of letters of invitation sent to the addresses of the partners and other persons entitled to attend the meeting. It is important that the notification period of 8 days is observed.
The invitation to the general meeting must also specify the items on the agenda to be discussed. If this is not observed or the notification deadline is not met, no resolution can be passed. It is not absolutely necessary to be present in person as a partner. If the articles of association provide for this, it is possible to participate in the meeting by means of an electronic means of communication. The partners’ meeting is held at the place specified in the articles of association or in the municipality of the company’s registered office. This can also be a place outside the Netherlands.
Action required for the shareholders when the financial year ends
As discussed above, a legal entity is obligated to, at least once a year, hold a general meeting (of shareholders). This general meeting is where final decisions are made and where financial statements are approved. From 1 January 2025, you will be allowed to organise a fully digital general meeting. This is in addition to the already existing option of a partially digital (hybrid) meeting.
FINANCIAL STATEMENT FOR EACH FINANCIAL YEAR
Almost every Dutch corporate entity should prepare financial statements according to the law usually incorporated in the statutes of the entity.
The primary function of financial statements is reporting to the shareholders. The shareholders are supposed to discharge the board of directors for their performance upon acceptance of the financial statements.
The financial statements are to be prepared and approved by the managing directors no later than five (5) months after the end of the financial year. The preparation period for the financial statements may be extended for at most five (5) months at the shareholders’ meeting. Hence, the shareholders must adopt the financial statements within two (2) months after the approval of the managing directors. The deadline for publication will be 12 months after the end of the financial year.
Finally, the company must file an abbreviated version of its balance sheet and notes (the publication accounts) with the Chamber of Commerce for publication in the Trade Register no later than eight (8) days after the determination or approval of the financial statements.
If the shareholders are also the managing directors, the approval date of the financial statements by the managing directors would automatically be the adoption date by the shareholders. Consequently, the filing deadline for the publication accounts will be five (5) months (or ten (10) months if the extension period of 5 months is applicable) after the end of the financial year, plus eight (8 days).
Action required for the directors when the financial year ends
FINANCIAL STATEMENT FOR EACH FINANCIAL YEAR
As discussed above, the financial statements are to be prepared and approved by the managing directors no later than five (5) months after the end of the financial year. In relation to the preparation of the financial statements, based on Part 9 of Book 2 of the Dutch Civil Code, for instance, the annual accounts are adopted with due observance of what has appeared at the balance sheet date with regard to financial matters which have occurred between the preparation of the annual accounts and the General Meeting at which these accounts are discussed, as far as this is essential to provide the insight. If it becomes clear afterwards that the annual accounts seriously fail to provide that insight, then the Board of Directors shall report this immediately to the members or shareholders and shall deposit a statement in respect thereof at the office of the commercial register.
It’s vital for the directors to acknowledge their responsibility for the preparation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code.
In addition, it’s quite often that the company engages a third party to prepare the financial statement. The directors are required to provide the third party with access to all information and supporting documentation and all minutes of the general meetings, supervisory board and the management board.
In this case, upon the finalization of the preparation, the directors confirm their agreement by a signed letter of representation.
CORPORATE INCOME TAX RETURN
Private or public limited companies (BV or NV) in the Netherlands have to file a corporate or corporation income tax return every year. This is called vennootschapsbelasting or vpb in Dutch. You file your tax declaration after closing your company’s fiscal year. Some foundations and associations also have to file corporate income tax returns.
In the Netherlands, the corporate income tax return is often prepared by a third party. However, the responsibility for approving the tax return ultimately lies with the company’s management, typically the board of directors. The board would review and authorize the tax return before it is filed with the tax authorities.
LIABILITY OF DIRECTORS
The managing director can be held personally liable to the company if the following scenario occurs:
Misrepresent annual accounts: when there is supporting evidence showing that the directors have published incorrect or misrepresented financial accounts to the company;
Losses: the company incurs substantial losses due to the gross negligence of the board;
Failure to observe the internal rules – if the loss arising from such transactions as a result of directors failing to observe the rules laid down in the Deed of Incorporation, comply with Dutch corporate law or if they exceed their authority limit in representing the company;
Unable to pay taxes: The director(s) must notify the tax authority if the company is unable to pay its taxes, they may be held jointly and severally liable for the company’s failure to settle any taxes.
The challenges that the foreign entrepreneurs may face when attempting to keep a Dutch BV in good standing
Understanding Dutch laws and regulations: The board and their company secretaries may not be familiar with Dutch laws and regulations, which can make it challenging to comply with local requirements such as submitting annual reports, maintaining accurate records, and adhering to Dutch company law.
Accessing local expertise: They may struggle to access the expertise and resources they need to keep the BV in good standing, particularly if they are based outside of the Netherlands.
Managing UBO reporting requirements: The BV is required to maintain a register of ultimate beneficial owners (UBOs) and submit annual UBO confirmation statements to the Dutch Chamber of Commerce. Keeping the UBO register up-to-date and submitting accurate statements can be challenging, particularly if there are changes to the UBO(s) or their information.
Language and cultural barriers: They may encounter challenges related to language and cultural differences, particularly if they are not fluent in Dutch or unfamiliar with Dutch business practices.
Managing relationships with stakeholders: The BV may have a range of stakeholders, including shareholders, employees, customers, and suppliers. Managing these relationships and ensuring that the interests of all stakeholders are balanced can be challenging, particularly if the foreign board and their company secretaries are not familiar with the local business environment.
Overall, the foreign board and their company secretaries may face several challenges when attempting to keep a Dutch BV in good standing. Overcoming these challenges may require access to local expertise, effective communication, and a strong understanding of Dutch company law and business practices.
Expertise of Bolder Launch
CORPORATE HOUSEKEEPING
For many entrepreneurs corporate housekeeping is an important ‘balancing item’, which often receives insufficient attention. Bolder Launch can relieve its clients of a great deal of work in this area. Our team can, for example, draft and facilitate periodic and non-periodic decision-making, monitor deadlines, keep the data in the Trade Register up to date, carry out corporate health checks as well as file and act as custodian of corporate documents. This provides our clients with deeper insight into their business operations and allows them to work more efficiently.
BOOKKEEPING SERVICES
Bolder Launch can act as your local bookkeeper or administrator, keeping your books in order according to local regulations, and filing the appropriate tax returns. Furthermore, Bolder Launch provides you direct access to experts in the different forms of taxation, such as:
- VAT filings
- ICT filings
- OSS filings
- IOSS filings
- CBS filings
- Wage Tax filings
Bolder Launch unburdens your company of its administrative requirements, whether you are a startup or a well-established multinational. Bolder Launch can also assist in audit requirements, and accounting statements, thanks to a close cooperation with Dutch accounting partners.
Depending on your company structure we work closely with your inhouse administrative staff or we can save you the troubles of employing in house administrative staff altogether.
FINANCIAL STATEMENT / CORPORATE INCOME TAX RETURN
Bolder Launch can take care of all the formalities, which include the drafting of the Financial Statements, Publication Report (Chamber of Commerce), and preparation of the Annual General Meeting resolutions.
Should you require our assistance or have any questions, please contact us at launch@bolderlaunch.com / corporate@bolderlaunch.com. We are more than happy to assist with your blooming business.
The publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No presentation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Bolder Launch B.V., its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in reliance on the information contained in this publication or for any decision based on it.
