Step-by-step plan: Ending your general partnership (VOF)
If you decide to end your VOF (general partnership), you must notify the Netherlands Chamber of Commerce KVK. First, you must dissolve the partnership. Keep your administration for at least 7 years. Read this step-by-step plan to find out how to end your general partnership.
Have you and your partners made oral or written agreements? You may have done so orally or in writing via a partnership contract. If you have a partnership agreement or VOF contract, this includes agreements on the distribution of profits. And who is liable for losses and debts when the VOF is dissolved. Partners will need to pay part of the debts and may get their share back in cash or in kind, such as products.
When you end your general partnership, you and your partners draw up a final balance sheet. You can also have this done by a bookkeeper or accountant. Your final balance sheet is a last overview of the assets of your VOF. The capital must be settled (vereffening) and divided.
Pay attention to the following points:
All stocks and company assets will be transferred to the private assets of the partners when the VOF is ended. This includes company cars. If you have deducted VAT when buying these assets, you must now pay VAT on them. The amount of VAT is based on the value of the goods at the time you start to use them privately. It is part of the final VAT return (see step 8).
Does your general partnership have loans? Check what the agreements are. If you repay all or part of your loans, contact the financier and try to find a solution.
Do you have lease agreements? For example for a lease car? Check how much longer the contract runs. Contact the leasing company to find out what the options are.
After you have ended the VOF, you remain liable for risks. For example, you still have to pay off your debts. So, make sure you handle everything properly. Some insurers allow you to include discontinuation risks in business liability insurance. This is called run-off risk (uitlooprisico) and is the risk of claims after you have ended the business.
Check for any contracts or insurance your VOF has that you need to cancel, for example:
- phone numbers
- subscriptions
- lease agreements
Cancelling your business bank account
Before you close your business bank account, take care of the following:
- Download all bank statements and/or the annual financial statement.
- Stop current debit agreements and periodic transfers.
- Cancel linked credit cards and insurance.
Ask your bank about the process for cancelling a business bank account.
Then you can apply for a benefit via the Decree on Social Assistance to the Self-Employed (Besluit bijstandverlening zelfstandigen, Bbz). With the help of the Bbz you can receive benefits in addition to your income up to the level of a social welfare benefit. Please note: you must have spent at least 1225 hours per year on your vof. You must meet certain conditions:
- you have spent at least 1,225 hours per year on your VOF
- you cannot end your business immediately, but are forced to do so soon
Apply for the Bbz benefit at the social services of the municipality where you live. If you are not sure wether you are eligible, do the Bbz check (in Dutch).
If you were born after 1960, the benefit applies until the VOF ends.
Then you may be eligible for the Older and Partially Disabled (Formerly Self-Employed) Persons Income Support Act (Wet inkomensvoorziening oudere en gedeeltelijk arbeidsongeschikte gewezen zelfstandigen, IOAZ). With the IOAZ benefit, your income will be supplemented up to social welfare level. You must be able to demonstrate that you have too little income to live on. Your assets will be checked. Apply for the IOAZ benefit at the municipality where you live.
Do you have staff? Tell them in time that you are going to end your business. This way your staff can look for different work in the meantime. Also, check which contracts or agreements you have with customers and suppliers. Do this before you tell them you are ending your business.
There are rules you must follow when you dismiss staff. You need to apply for a dismissal permit (ontslagvergunning) for economic reasons. Does the collective labour agreement (CAO) state that you must make a social plan? With, for example, agreements such as a transition payment and help in finding new work. Then you must make such a plan and follow it.
You must also inform the Tax Administration of the dismissal. That way, the Tax Administration knows that you no longer have to withhold payroll takes and file returns for your staff. Step 17 of the Payroll Taxes Manual (Handboek Loonheffingen, pdf, in Dutch) describes what you have to report.
Unable to pay your staff? Report inability to pay
If you are ending your VOF due to financial problems, you may no longer be able to pay your staff. This is referred to as insolvency. You must report this to the Tax Administration. The UWV may then be able to take over part of your wage payments.
In order to end and deregister your VOF, you must first dissolve it. All partners must then give notice. There is no notice period. It is wise, however, to lay down the conditions of the dissolution in a contract and to have it signed by all partners. Report the dissolution of your VOF to KVK with Form 17: 'Reporting a dissolution of a VOF, CV, maatschap, or rederij'.
Dissolution through a court
If the partners do not agree about dissolving the VOF, you can apply to the court to have the VOF dissolved. This can only be done for important reasons such as disturbed relationships and malpractice by a partner.
Dissolving a VOF with outstanding debts
Are you forced to end your general partnership because your company is in debt? Investigate what your options are with the Debt Flowchart on KVK.nl. The flowchart gives you tips on how to get rid of short-term and long-term debts. For temporary debts, you can first apply for a suspension of payment. Do any debts remain that you cannot pay? Then you must file for bankruptcy.
Deregister your VOF from the Dutch Business Register. To deregister your VOF, you must first dissolve it (see the previous step). The Netherlands Chamber of Commerce KVK informs the Netherlands Tax Administration about the termination. You will receive a letter from the Tax Administration about the consequences for income tax and VAT. Do you want to apply for an unemployment benefit (uitkering)? Do this before deregistering (see step 3).
After KVK informs the Tax Administration that your general partnership has been deregistered, all partners will receive a letter stating that you must submit a final VAT return. Only once you have filed your last VAT return will the Tax Administration send you final confirmation of deregistration as a VAT entrepreneur.
Each partner must file a final income tax return. You will not receive a separate letter about this as you do for the last VAT return (step 8).
After ending your general partnership, you must keep business records for at least 7 years. This depends on the type of data. You may also scan the records to keep them digitally.