For every type of business and industry, there is a most commonly used business structure. Although this does not mean this option will fit best with your specific situation, the overview below does make it easy to get an understanding of the differences.
| Scenario | Company Form |
|---|---|
| Sole Proprietor with no staff | Sole Proprietorship |
| Family Owned Business (of any size) | Private Limited Company |
| SME businesses with limited amount of shareholders/investors | Private Limited Company |
| SME business without ANY stakeholder except for Founder | Sole Proprietorship or PLC |
| General Partnership between >3 partners | VOF |
| Professional Partnership (lawyers, doctors) | Maatschap |
| Charitable activities or NGO | Association or Foundation |
| Non-profit with members | Association |
| Partnership between >5 partners | VOF or Coop |
| Multinational entering a new market | Private Limited |
| Multinational planning to go ‘public’ | Public Limited Company |
| (self-sufficient) Crypto Company | Foundation |
| Family Fund | Foundation |
| Investment Holding | Private or Public Company |
Which legal entity best suits you depends on your circumstances. The most common considerations have been compiled below to help you decide. If you need personalised advice, contact our Incorporation team.
There are company forms with and without corporate (legal) personality, also called a ‘corporate veil’, because this legal personality (or veil) protects the assets of its shareholders from any liabilities of the company.
Legal structures with corporate (legal) personality are:
Private Limited Company (bv or besloten vennootschap)
This kind of company can be registered if you have a minimum share capital of 0.01 EUR, according to the recently amended Company Law. There are a series of requirements related to the Board of Directors and local company headquarters, both being required for what the local regulations describe as “substance”, and our company Bolder Launch is able to provide all required services to foreign businessmen.
The Dutch BV is one of the most selected legal entities for foreign entrepreneurs.
This legal entity is called a BV (Besloten Vennootschap) and it’s the equivalent of the U.K. PLC, or the German Gmbh, the Delaware LLC, and many other similar entities worldwide.
Compared to most European Private Limited Companies, the Dutch BV is fairly simple to incorporate. There are no local shareholders and directors required, and the minimum capital requirement for a Dutch BV has been abolished per 1 October 2012.
The incorporation of a Dutch BV requires the involvement of a Dutch notary. There is no requirement for each shareholder or director to visit The Netherlands and meet the Dutch notary. The incorporation can be done by Power of Attorney, although each stakeholder needs to be properly identified (using legalized copies of identification documents and signatures).
To start a Dutch BV you will require the following documents:
- Proof of identity unless the individual shareholder visits the Dutch notary or our office (colour copy passport, national identity card (only allowed for EU nationals).
- Proof of residential address, no more than 2 months old, certified (utility bill or bank statement )
- If you have corporate directors or shareholders then the extract of the Registrar of Companies, showing the authorised persons, must be delivered (notarised), as well as the Articles of the corporate body, and a Legal Opinion on the current authorities and legal structure
- Rental agreement of your office or Flexi-desk.
How long does it take to establish a Dutch BV?
The total incorporation procedure for a Dutch BV can normally be completed in 5-10 business days.
For the entire procedure, including the gathering of necessary information and documentation, in our experience, you should consider a period of one to two weeks. We emphasize that an accelerated procedure is possible. Read more about setting up a Dutch BV as our service.
Public Limited Company (nv or naamloze vennootschap)
A well-known alternative to the Private Limited company is the Public Limited Company. The Public Limited is called the NV (Naamloze vennootschap) in The Netherlands. It does require a paid-up share capital (45.000 EUR) and has other requirements to consider.
The Dutch NV is the so-called Public Limited Company. This means that the shares of a Dutch NV are freely transferable, without the required consent of the other shareholders. In fact, there is no legal requirement to keep a shareholders register, although there are some upcoming changes in this aspect.
The Dutch NV is the only legal entity that is able to go ‘public’ in The Netherlands and get listed on a stock exchange.
From a legal point of view, the Dutch NV looks very much like the Dutch BV, and they have to consider many of the same Company Law stipulations. Both entities require the involvement of a notary to get incorporated, after which the entity will be registered at the Chamber of Commerce.
Both types of legal entities are liable for the standard Corporate Tax rates.
Until all of the formation requirements have been met, the founders of the NV are jointly and severally liable, which is also true for the BV. Under normal circumstances, the directors of the NV are not liable for debts of the NV. In the event of bankruptcy, however, the directors can be held jointly and severally liable if there is improper management, while that improper management is also an important cause of the bankruptcy. In a number of cases, a Public limited company can also hold its (former) director liable for mismanagement. The high risks that drivers are supposed to run are reasons why they are very well paid in a number of cases, a fact that is the subject of discussion.
One of the differences in the required paid-up capital of 45.000 EUR (of which 20% should be paid up at formation).
Branch Registration
The branch registration of a foreign company is quite popular for companies that are slowly entering a new market. The registration of a branch differs from the formation of a Limited company as a subsidiary of an overseas company because the branch is not considered a separate legal entity.
For many companies, planning to expand to The Netherlands, the first consideration is if the Dutch branch will work best for them. To put this in other words; the registration of a Dutch branch is typically Plan A! If however, there are solid reasons not to opt for the Dutch branch, then the Dutch Private Limited (B.V.) would typically be considered Plan B.
A Dutch branch is only an option for existing (overseas) companies. It’s obvious that in order to register a Dutch branch, there needs to be a legal entity in place which can be registered at the Dutch Chamber of Commerce (KvK).
Another important issue is that your statutory documents must be available in English, Dutch or German. If this is not the case, it might be a costly affair to arrange this afterward, because the translation will require official certification.
The Dutch branch is very popular among British entrepreneurs, especially those affected by Brexit. However, also companies from within Europe, India, and The United States often use branch registration as their preferred corporate structure to enter the Dutch market.
The registration of a Dutch branch can be done within a few business days and does not require the services of a notary. The overseas company can be registered at the Dutch Chamber of Commerce and apply for a Dutch VAT number once registered. Opening a bank account for a Dutch branch might be challenging.
No minimum paid-up capital is required, although it’s required to translate and legalize the documents of the overseas company (English, German, and Dutch, is allowed).
To register a Dutch branch you will require the same documents as when you incorporate a Dutch BV (which would be owned by a corporate body):
- Proof of Identity and Proof of residential address of each stakeholder
- Proof of legal address, such as a rental agreement
- Certified set of the statutory documents of the overseas company (including the Articles of Association, Company Extract, Shareholder’s Register, and a Legal Opinion confirming the current authorized person(s) and corporate structure)
The registration of a Dutch branch is relatively simple, and as mentioned, does not require the services of a Dutch notary. Therefore in theory the registration of a Dutch branch can be done within a few business days, during a visit of the representatives of the (parent) company to the Netherlands.
It’s important to schedule the trip to the Netherlands properly, so that all the correct documents will be taken along, including the correct legalizations. Typically it requires our clients about 1 or 2 weeks to get the documentation in order, unless the parent company is based in an EU country and the statutory documents are issued in English, Dutch or German (which would speed up the branch registration process). Read more on how to register a Dutch branch.
Foundation (Stichting)
A Dutch Foundation (Stichting) is a unique legal entity and can be considered the ‘civil law’ equivalent of the Anglosakson ‘trust’.
Whereas the ‘trust’ is not a legal entity, but rather a ‘trust deed’, the Foundation is a (self-owning) corporate entity, without any share capital or shareholders. The vehicle is popular as an NGO vehicle or used for asset protection purposes.
It’s quite easy to register a company or non-profit vehicle in The Netherlands, even as a non-resident, or non-profit. Bolder Launch can assist you with the incorporation of the company, and the (business) development, as well as providing ongoing corporate secretarial and administrative support.
The Dutch Foundation can be an interesting vehicle, but it depends a lot on your situation.
A Dutch Foundation is a Dutch legal entity with limited liability but unlike a Dutch limited liability company (a Dutch B.V.) it has no members or shares capital.
As it is considered a ‘legal person’, Foundations can be used as the top entity in a group structure and be recognized as the UBO of the structure.
Foundations are commonly used for the following:
- Non-profit organisations
- Holding structures
- Re-invoicing purposes
- Privacy and asset protection
- Avoidance of inheritance tax and estate planning
- Protecting assets
Association (vereniging)
Setting up a Dutch Association is about pursuing a certain goal. It is therefore important to describe this goal as well as possible in the statutes of the Dutch association.
It is important to know that at least two people are needed to set up an association.
Making a profit is not forbidden, provided that these extra proceeds benefit the purpose of the association. Distributing the profit to members is not permitted.
An association can receive money in many ways, by performing commercial activities. Not by definitions from (tax-free) donations.
In any case, members are able to make contributions. It depends on the tax law in their country of residence, and whether the contribution is tax-deductible. Or not.
In order for us to assist you with the incorporation of the Dutch association, we would require (and suggest!) a Tax Memorandum which will clearly describe your situation and the tax consequences that you need to consider. There are substance requirements, gift tax considerations, and other possible tax affairs that might affect your position.
Business structures without corporate (legal) personality are:
Sole proprietorship or sole trader (eenmanszaak)
The sole proprietorship is quite popular among expats (freelancers) or startups that don’t expect any significant profits (or liabilities!) in their first years of business and are not likely to include investors or co-shareholders. You can find more information on the restrictions of a Sole Proprietor (as also is the case with a branch) in this article (compared to a Private Limited Company).
Neither ‘self-employed professional’ (also known as zzp’er) nor ‘freelancer’ can be qualified as a legal entity. It simply requires a registration at the Chamber of Commerce and a different type of Income-tax bill.
Self-employed professionals should decide if they want to operate as sole proprietors or to incorporate a private limited company. Our team can assist you in making this choice.
General partnership (vof or vennootschap onder firma)
This business form is applicable for companies with two or more partners that operate under the same name with the same economic objectives, and unlimited liability on the business’s debts. They share the profits and they don’t have to present a minimum share capital, such as for the Dutch BV. The personal assets of each general member of the partnership can be taken by the creditors if there are debts that can’t be covered by the company funds.
A Dutch Partnership can easily be established in the form of a so-called VOF (Vennootschap onder Firma). It’s not very usual to establish such a partnership, in order to perform international business activities, but it might be suitable in the case of a local partnership or joint venture. The VOF can also be interesting in jointly owning an asset in The Netherlands, such as real estate, although the C.V. is also a popular partnership type for this purpose.
Professional partnership (maatschap)
Professional Partnership is formed by two partners, at least, who are responsible for their claims. This kind of business is preferred for practicing a profession and not for business.
The partnership often involves several professionals who practice their profession in collaboration with others. Consider a general practice or an architectural firm.
The sizes are, therefore, all active as independent entrepreneurs and are taxed in this way. Certain matters such as accommodation or a joint profit distribution are arranged by the umbrella partnership.
Starting a partnership is fairly easy. Start-up capital is not required and you do not have to go to a notary before it is established.
All sizes can be held liable in certain cases for a proportional part of the company. In the event of bankruptcy, a partner will not pay for the accrued debts on his own (this can be both an advantage and a disadvantage).
It is possible to hire staff on behalf of the partnership.
Even though you compete with the other sizes under one size, in many cases you retain your own customers.
The contribution of other sizes can be beneficial for you because you share the profit with each other.
Limited partnership (cv or commanditaire vennootschap)
To register another form of partnership, the Dutch CV (Limited Partnership), at least two partners are required – one managing partner who has unlimited liabilities and takes the management decisions – and a silent partner who invests in the partnership (typically in the form of capital)and has his liability limited to his contribution.
It’s not required to visit the notary to establish a CV. It is, however, advised to involve a professional to draft a proper CV- deed, which functions as a partnership agreement.
This partnership agreement (CV deed) is not legally required, however, putting your objectives and agreements in writing, it will ensure clarity among the partners. For example, in a CV partnership agreement you would include:
- Who the managing and silent partners are and what they contribute, such as money, labor, and machines;
- How to distribute the profit and loss;
- at which time the CV ends, for example, due to cancellation or incapacity for work.
You can, of course, ask the notary or our help, to draft the CV partnership agreement. However, this is not mandatory.
This guide is part of Company Formation in our Launch Guide.
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How to start a Dutch BV (Private Limited Company)
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When you decide to work with Bolder Launch, we will carefully review your situation to give you personalised advice on the corporate structure that suits your needs. The BV is a very flexible legal entity, allowing you to structure the company in various ways whilst protecting your company from ‘hostile takeovers’. For example, in most cases, shareholders should offer any shares to co-shareholders first, before they can offer the shares to ‘the market’. This is why the BV is called ‘Besloten’, which means ‘Private’.
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A Dutch Foundation is a Dutch legal entity with limited liability but has no members or share capital. If you plan to start a Dutch foundation, there are a lot of considerations to factor in.
But first, what is a Dutch foundation? A Dutch Foundation (Stichting) is a unique legal entity, which can be viewed as the ‘civil law’-equivalent of the Anglosakson ‘trust’. Whereas the ‘trust’ is not a legal entity, but rather a ‘trust deed’, the Foundation is a (self-owning) corporate entity, without any share capital or shareholders. This means the Foundation can own assets, a bank account, and even decide to perform profitable or non-profitable activities (to which different tax treatments apply).
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As mentioned above, to establish a public limited company in the Netherlands, you will need the involvement of a Dutch notary. The notary draws up the deed. It also usually takes care of the registration of your NV in the Trade Register of the Chamber of Commerce.
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