Business structures in the Netherlands: overview
In the Netherlands, you have to choose a legal structure when you start a business. Choose a legal structure that best suits your situation. Consider, for example, how you want to handle liability, whether you want to partner with others, and what is advantageous for taxes.
What is a legal structure?
A legal structure is the legal form you choose for your business. For example, a sole proprietorship, limited liability company (bv), or general partnership (vof). You cannot operate a business without first choosing a legal structure.
You determine your business structure when you register at the Netherlands Chamber of Commerce (KVK). Your choice will help determine such aspects as liability and tax obligations.
Types of legal structures
There are business structures with and without legal personality. In a legal structure without legal personality, you are liable for your business's debts with your private assets.
Legal structures without corporate (legal) personality
Shipping company (rederij)
Legal structures with corporate (legal) personality
If your company is a legal personality, you will not be personally liable for the company's debts. There are some exceptions to this, for instance if grave mismanagement, recklessness, or fraud on your part has led to the debts.
Most starters opt for a sole proprietorship. If you are alone, then a sole proprietorship or private limited company (bv) is often the best option. If there are several people involved, you can choose different legal structures.
Legal structure for collaboration
Do you want to collaborate with another self-employed person to carry out large assignments? Or do you want to market a new product together? Choose a legal structure that suits your collaboration. Among other things, the legal structure determines who is liable, for example in case of debts. Whether a partner can stop or an additional partner can join. Record your agreements in a cooperation agreement.
European legal structures
European legal structures offer you the option to work together across borders with companies from other Member States of the European Union. There are 3 European legal structures:
- Societas Europaea (SE, European public limited liability company)
Determine how you want to be liable
In a sole proprietorship and general partnership (vof), you are also liable with your private assets for any debts of your business. Creditors can then seize your private assets and those of your partner, for example. You can avoid your partner's liability with a prenuptial or partnership agreement. With a legal personality, such as a private limited company, you are only privately liable for the debts of your business in exceptional cases.
What is advantageous for your taxes?
As the owner of a sole proprietorship or general partnership (vof), you pay income tax on profits. As owner of a sole proprietorship or partner in a general partnership (vof), you are often entitled to additional tax benefits, such as the private business ownership allowance (zelfstandigaftrek). Especially in the start-up phase, when your business makes relatively little profit, you are usually better off fiscally with a sole proprietorship or general partnership (vof).
A bv pays corporate income tax and possibly dividend tax. The director-major shareholder (dga) also pays income tax on their salary and on dividends paid. The bv must pay the director-major shareholder a salary in line with the market (in Dutch).
From a profit of €150,000, you pay less tax on average with a bv than with a sole proprietorship or general partnership (vof). But the costs of a bv are higher. These include annual accounting obligations and auditor fees. A manager-director shareholder is not entitled to the private business ownership allowance.
You cannot put your company on hold
It is not possible to put your company on hold. When it is necessary to temporarily stop working less than 6 months on your business, for example, to study, travel, or for a period of paid employment, you can keep your business registration. But if it takes longer, you should deregister. Read more about your options. If your company is a legal personality, you must dissolve it before you can de-register. If you want to continue with your business later, you need to register again. You will then get a new KVK number, VAT identification number and VAT tax number.
So long as your business is registered, your legal obligations continue. Depending on your legal structure, you have to file tax returns, keep business records, and file financial statements with KVK. You also have to honour any contracts with suppliers and customers you have entered into.
Formation requirements per legal structure
If you start a business, there are requirements you must meet. The requirements differ per legal structure. For sole proprietorships and general partnerships (vof) there are no incorporation requirements. And you do not need any start-up capital. You register the legal structure at KVK yourself. Other legal structures are set up through a civil-law notary. Like a bv, nv or cv. For an nv you need a starting capital of € 45,000.
Statistics: businesses by legal form
Number of business structures with and without corporate (legal) personality.
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Questions relating to this article?
Please contact the Netherlands Chamber of Commerce, KVK