Spouse, civil partner, or children working in the company
If your life-partner or child comes to work in your business, you will want to arrange this properly. For the sake of the business, your partner or child, and yourself. Find out the different ways your partner or child can work in your business, the implications involved, and how to set it up.
How can your spouse or partner join your company?
Your family member can join you in your business in various ways:
You conclude an employment contract with your spouse or partner (by marriage or registered partnership), or child. Your family member is then employed by your company. This means that:
- your partner or child has the same rights as your other staff.
- you pay a commercial salary that is comparable to the salary you would pay someone else for the work
- there is a relationship of authority. This means you can give your family member instructions regarding the work
- your partner or child receives the same statutory protection as other employees. For example, in the event of illness or dismissal. You can deduct the wage costs you pay from your business profits.
What you need to arrange
- Is your partner or child your company's the first employee? Then you must register as an employer with the Tax Administration.
Also see the step-by-step plan: employing staff in the Netherlands
Is your child 17 years old or younger?
Then also follow the rules regarding work performed by minors.
Liability of your partner or child as an employee
If your partner or child becomes an employee, the situation remains the same as if they were not working in the business.
Do you have a sole proprietorship (eenmanszaak), general partnership (VOF), limited partnership (CV), or professional partnership (maatschap)? Your partner may sometimes be liable for your business's debts. This depends on how your relationship is legally structured.
Read more about running your own business and your partner's liability.
If your family member becomes a co-owner, they will have a say in the business and share in the profits.
Common business structures with multiple owners include the general partnership (vof) and the private limited company (BV).
Do you have a sole proprietorship and want your partner or child to become a co-owner? Then you must change your business structure.
Working together in a VOF
If you enter into a general partnership (vof) together, both you and your life-partner or child are partners (vennoten) in the partnership:
- you share the profits, and each of you pays income tax.
- you are both personally liable for the partnership's debts.
If the Tax and Customs Administration regards both of you as entrepreneurs for income tax purposes, you are both entitled to the entrepreneur allowance (ondernemersaftrek).
Working together in a BV
If you work together in a private limited company (BV), you and your family member are both employed by the company. You both receive a salary.
An employee who owns 5% or more of the shares, either alone or together with their tax partner, is a director and major shareholder (DGA). The salary of a DGA and of a tax partner who works in the business must be appropriate for the work they do. You cannot receive no salary or a very low salary. This is called the customary salary scheme (gebruikelijkloonregeling, in Dutch).
One or both of you is the director of the BV. As a director, you are generally not personally liable for the debts of the BV.
The general meeting of shareholders decides what happens to the profits and how they are distributed. As a shareholder, you may be entitled to part of the company's profits. Whether you receive profits and how much you receive also depends on the type of shares you own.
Read more about the private limited company (BV)
Working together in other legal structures
Your partner or child can also become a co-owner of a:
- limited partnership (CV)
What you need to arrange
For a BV, you must have the co-ownership recorded by a civil-law notary. For an NV, this depends on the type of shares and how the shares are traded.
For a general partnership (vof) or professional partnership (maatschap), you do not have to arrange this through a civil-law notary. But it is wise to record the agreements about your partnership in a cooperation contract.
Inform KVK if your partner becomes a co-owner. Does your partner join a limited partnership (CV) as a limited partner? You must also inform the Dutch Tax Administration.
Does your business have a different business structure from a BV, VOF, maatschap, CV, or NV? You must first change your legal structure.
Liability of your partner or child as a co-owner
If your partner or child becomes a co-owner, they have the same type of liability as you. The rules depend on the legal structure:
- In a VOF or CV, your family member becomes personally liable for the debts of the partnership.
- In a maatschap, each partner is liable for their own debts within the partnership, not for the debts of the other partners. Unless you all have agreed to enter into an obligation together.
- In a BV or NV, your family member is usually not personally liable for the company's debts if they are a director. There are exceptions.
This option is only available for your partner, not for your child.
You pay your partner a compensation (vergoeding) for the hours they work in the business. The amount must be appropriate for the type of work they do.
Do you pay less than €5,000 per year?
If you pay your tax partner (in Dutch) less than €5,000 per year, you cannot deduct the payment from your profits. Your partner does not pay income tax or national insurance contributions on this payment.
In some cases, you may be entitled to the working co-working partner tax relief (meewerkaftrek). You can deduct this amount from your profits.
Read more about the co-working partner tax relief
Do you pay €5,000 or more per year?
If you pay your tax partner €5,000 or more per year, you can deduct the payment from your profits.
Your partner pays income tax and national insurance contributions on the payment.
What you need to arrange
record in your business records how you pay your partner. For example, you can transfer the money to their bank account. Or with a statement that you owe the money to your partner. It is also a good idea to keep a record of the hours your partner works.
Do you want to mak use of the co-working partner tax relief? You can do this in your income tax return.
Your partner's liability if they receive compensation
If your partner receives a compensation, their liability does not change because they work in your business.
Do you have a sole proprietorship, general partnership (VOF), limited partnership (CV) or professional partnership (maatschap)? In some cases, your partner may be liable for your business debts. This depends on how your relationship is legally arranged.
This option is only available for your child, not for your partner.
Your child has a fictitious employment relationship (fictieve dienstbetrekking) if your family relationship means that their employment conditions are different from those of your other employees. Your child must also be at least 15 years old and must not receive profits from the business.
In the case of a fictitious employment relationship:
- you must withhold wage tax/national insurance contributions and pay the healthcare insurance contribution (ZVW).
- your child is not insured under the employee insurance schemes.
- you must comply with all administrative obligations (such as keeping a copy of the identity document in the records).
What you need to arrange
You must deduct wage tax and national insurance contributions and pay the employer's Zvw contribution. You must also meet all administrative requirements, such as keeping a copy of your child's identity document in your records.
Simplified payroll tax scheme
Under certain conditions you may use the simplified scheme for wage tax/national insurance contributions and the ZVW for children working in your company. Among other things, you only need to file a payroll tax return for your child(ren) once a year. You need a separate payroll tax number, which you can request using the form ‘Notification of payroll tax for employer of cooperating children’ (in Dutch).
Read about the simplified scheme and conditions in Chapter 18, Section 11 of the Payroll Taxes Handbook (in Dutch).
Your child's liability
If your child has a fictitious employment relationship, they are not liable for the debts of your business.
Get personal advice
Each form of working together has different consequences for you and your life-partner or child. For example, it can affect your income and taxes. It can also affect what happens if someone becomes ill or if the business has debts.
Discuss your situation with your accountant or bookkeeper. You can also call the KVK Advice Team on 088 585 22 22.