The death of a loved one is always difficult. When the deceased also leaves a business behind, you will have a lot to arrange regarding that business. Read what the most important steps are when an entrepreneur dies.
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1. Report the death to the municipality
You must report the death of the entrepreneur to the municipality. Usually the funeral director does this. The municipality automatically passes on the notice of death to the Netherlands Chamber of Commerce (KVK) and the Dutch Tax and Customs Administration. After 5 days you will receive a letter of condolence from the Tax Administration as confirmation.
2. Check if there is a will
Check if the deceased has a will via the Central Testament Register (CTR, in Dutch). If there is a will, the CTR will say which notary made it. You can request the will from this notary. Note: Only legal heirs and other heirs named in the will may view the will.
If there is no will, the law determines how the inheritance is divided. In complex inheritances, the deceased will usually have chosen one or more executors. That is someone who arranges the inheritance or certain matters from the will. This can be one of the heirs but also someone else, such as a notary.
3. Contact the KVK Bereavement Support Team
The KVK Bereavement Support Team (nabestaandendesk) helps you arrange practical matters concerning the business. Such as the deregistration of the deceased from the Business Register. Every situation is different so the KVK Bereavement Support Team provides a personal service.
If you inherit the business, you have to decide what happens to it. There are 3 options:
- You close the business.
- You continue the business yourself.
- You transfer the business to someone else.
After the death, contact the KVK Bereavement Support Team:
- Send an email to firstname.lastname@example.org.
- Include your name and telephone number.
- Indicate which KVK registration number it concerns.
An employee of the KVK Bereavement Support Team will contact you as soon as possible. The Business Register is linked to the Personal Records Database (BRP). When someone dies, this information is passed on to the KVK Bereavement Support Team. If you do not contact them, the KVK Bereavement Support Team will usually contact you 8 weeks after the death.
4. Obtain a certificate of inheritance
Financial institutions such as banks and insurers always ask for a copy of the will and the death certificate if you want access to funds.
Some financial institutions also require a certificate of inheritance. This is a statement that a civil-law notary can arrange for you. This certificate shows who the heirs are and who is authorised to make decisions. This is important, for example, for bank deposits or payouts from an insurance company. Only through this certificate do these institutions know who is allowed to make decisions about the assets of the deceased.
A certificate of inheritance states, among other things:
- That someone has died.
- If the deceased was married or in a registered partnership.
- If so: in community of property or with a prenuptial agreement.
- If there is a will.
- Who the heirs are.
- If the heirs have accepted the inheritance.
- If there is an executor.
- Who is allowed to arrange the inheritance and decide about the possessions.
Declaration of executorship
Is an executor named in the will? Then a declaration of executorship (verklaring van executele) is sometimes enough evidence. It states who the executor is. And that they are tasked with dividing the inheritance for the heirs.
5. Decide if and how you will accept the inheritance as an heir
You have 3 options when it comes to the inheritance. You can:
- Accept it unconditionally.
- Accept it favourably.
- Reject it.
You have 3 months to find out information about the deceased's assets and debts before you and any other heirs make a decision. This time is called the right of deliberation.
If the business is a general partnership (vof) or a professional partnership (maatschap) the deceased may have made arrangements with his business partners to ensure that the partnership does not disintegrate upon their death. Terms in the partnership contract may have consequences for the heir(s). Read more about these arrangements.
If you accept the inheritance unconditionally (zuivere aanvaarding), you inherit not only the assets but also the debts. If the debts are greater than the assets, you are liable and must use your private capital. This means that you have to pay the debts from the inheritance with your own money.
In the case of beneficial acceptance, you will receive the inheritance, but you will not be liable for any debts. If there are any debts, all assets of the inheritance must be sold as profitably as possible. With the proceeds, you have to pay off the creditors. Anything left of the inheritance is for the heirs. If the proceeds are insufficient to pay off all debts, you do not have to pay this out of your private capital.
In the case of beneficial acceptance of the inheritance, the settlement is more complicated. Legally, there are additional rules (pdf, in Dutch) you must follow. To accept an inheritance beneficially, you must make a statement to the court as heir. You pay a one-time fee. The notary can also arrange this for you.
If in doubt about debts, accept beneficially
You can accept an inheritance unconditionally in writing, but also by acting as an heir. For example, by dividing the assets of the inheritance in advance. Be careful doing this if you do not know yet if the inheritance mainly consists of assets or debts.
In an active business, it is often not immediately clear what the business risks are. In that case, it is safer to accept the inheritance beneficially.
Rejecting the inheritance
If you do not want the inheritance, you can reject it. For example, if you expect that there are more debts than assets. In case of rejection, you must state this to the court. You pay a one-time fee. The notary can arrange this for you.
If you reject the inheritance, you are not allowed to make any arrangements after the death. You are not an heir. You are also not allowed to take anything from the inheritance. If you do, you give the impression that you did accept the inheritance.
Is the heir a minor? The law states that the legal representative of the minor must always accept the inheritance beneficially on behalf of the minor.
6. Take charge of the administration
As heir of the deceased, you are obliged to take care of all matters associated with the inheritance. This includes the business. If an executor has been appointed, this is the executor's job. You or the executor must get access to both the business administration and the private administration. This is, among other things, necessary for the settlement with the Tax Administration.
Submit a VAT return on time so that you will not get a fine. For most entrepreneurs, that is at the end of the quarter. Check if you still have to pay suppliers. The entrepreneur may have outsourced the administration to a bookkeeper or accountant. In that case, they can help you or you can make new agreements about this.
7. Report the death to financial institutions
Report the death to financial institutions where the entrepreneur was a customer, such as banks, credit card companies, insurers, investment institutions, and pension funds. With a declaration of executorship and/or certificate of inheritance you prevent that money from the entrepreneur is blocked. Such as the balances on payment cards, credit cards, and internet banking.
8. File the last income tax return and inheritance tax return
21 days after the death, the Tax Administration will send a letter asking you to provide a contact person. And you will be asked to file an income tax return.
You will also receive an invitation to file an inheritance tax return (in Dutch). Everyone who receives something from the inheritance has to pay a percentage of the received inheritance. This percentage depends on the value of the inheritance, including the business. The relationship with the entrepreneur is also important. For example, a spouse or children pay a lower percentage than other heirs.
You continue the business
Will you continue the business, alone or with someone else? In that case, you usually do not have to pay inheritance tax. If you continue a business that you received through a gift or inheritance, €1 million of the value of the business is exempt from gift or inheritance tax. Some conditions do apply (in Dutch).
Business succession scheme
If you continue the business, you must do so for at least 5 years. And you adhere to the business succession scheme (in Dutch). If you do not do this, the Tax Administration will charge inheritance tax on the business.
You decide to end the business
For the Tax Administration, termination means that you will end the business (in Dutch). The Dutch Tax and Customs Administration will send you the final tax return. The form you use for this is called the F form (F-biljet). This is the business’ final statement and income tax return. The value of the business is also determined by this declaration.