Limited partnership (CV)

What is a CV?

A limited partnership consists of at least 2 persons. Within a CV, there are 2 types of partner – a managing partner and a limited partner.

• Managing partners. The managing partner runs the business on a day-to-day basis.
• Silent partners, also known as limited partners or sleeping partners. The limited partner is only involved in investing money in the CV.

A CV must have a minimum of 1 managing partner and 1 silent partner. But it is also possible for a CV to have several managing partners and/or several silent partners.

You can see the commanditaire vennootschap as a special type of general partnership (VOF). Like the VOF, the CV is not a legal entity. The managing partners are personally liable for possible debts of the company.

If you want to set up a business, but you are not sure which legal structure to choose, use our Tool for choosing a Dutch legal structure. It will guide you through some of the main considerations, and give you advice suited to your situation.

Setting up a CV

If you want to set up a CV, you must register your limited partnership in the Business Register at the Netherlands Chamber of Commerce KVK. You pay a one-time fee to register. Basic details of the CV are registered such as company name and activities, as well as the names and addresses of the managing partners. For silent partners, you only need to state how many there are and how much they are investing. You do not need to provide KVK with their personal details.

Register your UBOs

Most businesses that register in the Dutch Business Register (including several European legal structures) have to include their ultimate beneficial owner(s) or UBOs in the UBO register. Read more about the UBO register.

Draw up a CV contract

It is not mandatory to draft a partnership agreement when setting up a limited partnership, but putting your agreements in writing can be useful. A CV contract might include, for example:

• who the managing and limited partners are and what they bring into the company, such as cash or labour
• how much the limited partners invest
• the contribution of goods and how partners will divide any profit or loss
• taking out a life insurance policy for the continuation of the business if 1 partner dies
• agreements about the client portfolio, should partners ever split up

All managing partners are authorised to act on behalf of the CV, for example by entering into contracts. And all managing partners may be held liable for the consequences of such acts. You can set out different agreements about liability in the CV contract.

You can draw up a CV contract yourself. Or you can arrange it through a lawyer or civil-law notary. The costs for drawing up a partnership agreement differ depending on the civil-law notary or lawyer. The CV's activities and the powers of the partners are recorded by KVK in the Business Register.

Read more about partnership contracts.

Liability

A CV is not a legal entity. This means that the managing partners themselves are responsible for all the company’s activities. And are liable for its finances with their own money. Also, for any debts. A managing partner is personally liable for the entire debt of the limited partnership. Even if the debts have been incurred by another managing partner.

Creditors can choose whether to claim the assets of the company or the managing partners first. If the assets of the company are not enough to repay the debts, creditors are entitled to the private assets of the managing partners. All your assets can be seized to pay your debts, including your savings and your home if you own it.

Is your partner liabile for your CV's debts?

Do you have a partner? If so, your partner may also have to help pay off your debts. Whether your partner is also liable depends on the official status of your relationship and when it began. With prenuptial or partnership agreements you can prevent creditors from accessing your partner's money. The rules for a marriage and registered partnership are the same.

Read more about your partner's liability for your business.

Is a silent partner liable?

A silent partner is not involved in the business operations and may not perform legal acts on behalf of the company. Such as signing contracts or reporting changes to the Business Register. So the silent partner is not personally liable. However, the silent partner can lose the money they invest in the CV. If a silent partner actively involves themselves with the CV, they may be privately liable.

Liability when joining later

A managing partner who joins the CV later is automatically liable for debts incurred before they entered the partnership. Are you joining an existing limited partnership? Check the financial situation first.

Managing partners who join later can also make agreements on the distribution of any existing CV debts. If a claim then arises, the other partners will reimburse the difference to the new partner. In addition, the CV can also agree directly with the creditor about this.

Does a managing partner leave? Then they remain liable for debts incurred while they were a partner in the CV. Again, the partners can agree among themselves on the division and compensation of the debts. And the CV can also agree directly with the creditor about this.

Please note: as long as you have not deregistered as a partner from the KVK's Business Register, you remain liable for any debts that may still arise. So, do not forget to deregister.

Keep business records

You are legally obliged to keep records. You can do this yourself or outsource it to a bookkeeper or accountant.

Filing financial statements

If all managing partners in your limited partnership are foreign, you must file your financial statements with KVK.

Taxes for a limited partnership

Income tax

As a managing partner, you must pay income tax on your share of the profit. If the Netherlands Tax Administration (Belastingdienst) views you as a business owner you are entitled to the SME profit exemption. If you meet the hours criterion (in Dutch), you are also entitled to other tax benefits, including the entrepreneurs' allowance (ondernemersaftrek). Starting entrepreneurs are also entitled to the tax relief for new companies (startersaftrek) 3 times in the first 5 years.

Read more about deductions and tax schemes.

VAT

For VAT purposes, the CV is an entrepreneur and pays VAT.

Silent partner

A limited partner is only entitled to tax schemes for investments, such as discretionary depreciation (willekeurige afschrijving) and the investment allowance (investeringsaftrek). Limited partners are not entitled to tax benefits for entrepreneurs.

• See additional information about paying taxes in the Netherlands

Signing contracts in the name of the CV

Each managing partner is authorised to sign. This means that they may sign contracts or perform other legal acts on behalf of the CV. If you want to limit the authority of partners, you can make agreements about this in the partnership contract and record them in the Business Register.

What is a power of attorney?

A CV can also choose to appoint power of attorney to someone else. This person is then authorised to act on behalf of the company. You can register this person in the Business Register. This is not mandatory, but it means your business partners also know who is allowed to act on behalf of the company.

Hiring personnel for a CV

A CV can hire personnel. If you hire personnel, you must pay payroll taxes and social contributions for them. If you are hiring an employee for the first time, you must register as an employer with the Tax Administration. You must also report this to KVK. Read the checklist Employing staff in the Netherlands for more information.

Social security and national insurance contributions

What you are insured for

As a managing partner, you pay national insurance contributions. You are entitled to an old-age pension (AOW) when you reach retirement age. AOW is a minimum income. You can arrange to supplement this pension yourself. If you are pregnant, you are entitled to the Maternity allowance for self-employed professionals (ZEZ). You apply for this at the Employee Insurance Agency (UWV).

Health insurance is mandatory and basic cover is sufficient. You pay a premium to your health insurance company and a contribution as part of your tax return.

What you are not insured for

Because you are not an employee, you are not entitled to any of the benefits available to regular employees, such as sickness, unemployment, or disability benefit (ziektewet, WW, and WIA respectively). It is up to you to take out disability insurance when you start your own business.

Depending on your company's activities, it can be wise to take out additional business insurance.

Ending a limited partnership

If a partner stops

The CV ends if a managing partner leaves the partnership agreement or dies. However, it is possible to include a survivorship or takeover clause in the partnership contract, so that the remaining partners can continue running the business. For instance, by seeking a new partner or continuing as a sole proprietorship. In the CV contract, you agree who is entitled to what and how you divide the company.

Changing a silent partner

Do you want to change a silent partner? If so, you need to amend your mutual contract. Does the number of managing partners or the contribution of the limited partners change? If so, you must report this to KVK. For the limited partners, you only need to state the number of partners and their contribution. You do not need to record their personal details in the Business Register.

If you want to end the CV altogether

If the CV stops altogether then the company must be dissolved. All partners must give notice to do this. When dissolving your CV, you have to pay any outstanding debts and return each partner's share in the partnership. This is called liquidation, or in Dutch vereffening. Any surplus is then distributed to the partners based on their share in the CV's profits. The way this is done is set out in the partnership contract. For example, you can agree that you divide what remains based on everyone's profit share. Or that you pay remaining debts from your private assets.

Make sure you report the changes to KVK and the Tax Administration.

More information about ending your limited partnership.

Changing your legal structure

You can change a CV into a different legal structure, such as a general partnership (VOF) or sole proprietorship. You must report your changes to KVK and the Tax Administration. Check Belastingsdienst.nl (in Dutch) to see if you have to pay discontinuation profit (stakingswinst).

You can also change the CV to a private limited company (a BV). One of the differences is that the BV is liable for finances and possible debts. There are several ways to change a CV into a BV. These steps are similar to changing a sole proprietorship into a BV.

Note: Be aware that for tax purposes, the Netherlands Tax Administration views changes in legal structure as ending one business and starting another.