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.
On this page
- What is a legal structure?
- Which corporate structure suits your company?
- Types of legal structures
- European legal structures
- Checking for reliability
- Report changes in legal structure
- Filing financial statements
- You cannot put your company on hold
- Determine how you want to be liable
- What is advantageous for your taxes?
- Formation requirements per legal structure
- Tips for choosing a legal structure
- Statistics: businesses by legal form
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.
Which corporate structure suits your company?
There are many possible business structures, as listed on this page. Which one suits you best depends on your circumstances. To help you choose, you can use our interactive tool for choosing a Dutch legal structure. Or you can scroll down on this page to find the most common considerations in the paragraph Tips for choosing a legal structure.
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.
Business structures without corporate (legal) personality are:
Shipping company (rederij)
Legal structures with corporate (legal) personality are:
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.
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)
Checking for reliability
If you choose a structure with legal personality, your company will be checked by Justis, the Dutch screening authority. Justis checks the directors and other persons involved for reliability. (in Dutch). This is to prevent abuses such as fraud, money laundering and drug trafficking
Report changes in legal structure
Any changes in your company's legal structure or partnership will affect your tax situation and your administration. You must report changes to the Tax Administration and KVK. You may have to reapply to your municipality for certain permits. This applies, for example, to the alcohol licence and operating permit for a hospitality establishment.
Filing financial statements
Certain types of company are required to file their financial statements with KVK. The size of the company determines how the statments have to be submitted.
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 a period of paid employment, you can keep your business registration. But if it takes longer, you should deregister. Read more about your options (see the FAQ: Can I temporarily put my business on hold?). 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.
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. 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 his 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.
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 the 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.
Tips for choosing a legal structure
There are quite a few considerations to be taken into account when making the choice for a legal form or business structure. The statements below can help you find out which bracket suits your situation best. Select and deselect statements to access information on several considerations you may have. Try to read all the information here; it will help you make a well-informed decision.
In the Netherlands, there are many options, but the business structures chosen most often are:
Of these 4, the sole proprietorship and general partnership are not legal entities. The private limited company and the cooperative are. The difference is explained in the paragraph Types of legal structures.
Those are not legal structures, even though the terms are widely used. Freelancers/zzp'ers need to choose a business structure when they register – usually, they opt for sole proprietorship. But a private limited company is also an option. You can also opt to start a cooperative together with a group of other zzp’ers; that way, you have the protection of a legal entity, with the benefits of a sole proprietorship. Be aware that the cooperative will have to pay corporate tax over profits made.
In that case, you can register as a sole proprietor or as a private limited company. Once you have registered as a sole proprietor, you can decide to join or found a general partnership or cooperative.
In that case, you may want to start out as a sole proprietor. Be aware though, that as a sole proprietor you are personally liable for your company debts. On the upside, you will be liable for income tax but not for dividend or corporate tax. And there are tax benefits to be had: check the entrepreneurs' allowance.
In that case, a private limited company may be the choice for you. To start a private limited company, you will require the services of a notary. Be aware that as a bv you will be liable for corporate tax and Dutch dividend tax. Also, you will need to file your own income tax return over your salary. On the upside, you will not be personally liable for the company’s financial obligations.
In that case, you may consider starting out as a general partnership (vof), a private limited company (bv) or a cooperative. The bv and cooperative are legal entities. This has consequences for liability and taxes. Use the tool for choosing a Dutch legal structure to find out which of the 3 suits your situation best.
In that case, you might consider starting a private limited company, as this will make you eligible for lower taxes.
BV’s are often viewed as more ‘serious’ than sole proprietorships, especially abroad. So if you want to do business internationally, if you want to secure major clients, or if you want to be able to sell your business later on, a private limited company will help you realise those goals. On the other hand, starting a cooperative also lends you a professional image. So if you start out as a sole proprietor and then join forces with others, your business will profit from all the advantages of legal status, while preserving the benefits of being a sole proprietor. Also, you’ll profit from benefits that come from operating on a larger scale, such as tariffs for procurement and housing.
If you are looking for capital, and you involve private investors or banks, most likely they will want some security that their investment is a sound one. To provide this security, you either need to be able to prove that you can pay back the investors if the business goes bankrupt, or you need to start a private limited company, in order to establish a legal entity, which is more secure as a creditor than a sole proprietor (i.e., you personally). You may decide to offer your investors a share in the business, this is called equity. In that case you have shareholders, and need to start a bv. If you can procure government funding, you may not need to take money matters into account quite as much when deciding upon a business structure. But always be aware that loans have to be repaid somehow, and be realistic about your ability as a private person to do so.
Not what you are looking for?
If you need personal advice, contact KVK. They can talk you through the options.
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