Cooperative
If you are interested in the benefits of working as a collective, one option is to set up a cooperative (coöperatie) with 2 or more entrepreneurs. One of the benefits is that you can purchase goods and services at lower prices and share costs such as marketing. Members can enter or leave the cooperative without jeopardising its continued existence.
What is a cooperative?
A cooperative is a special association that helps its members to purchase goods and services together and share the costs. A cooperative consists of at least 2 members.
Members can leave or join without the cooperative having to close down. This is different from a general partnership (vof) or professional partnership (maatschap), for example, where partners cannot simply leave. If one member becomes ill, the other member(s) can take over the work.
The most important decisions are taken by the members together at the general members' meeting (Algemene Ledenvergadering, ALV).
Board of directors
One of the ALV's tasks is to appoint a board of directors to manage the cooperative's affairs. The board is mostly made up of members and enters into agreements with and for the cooperative. All members have voting rights. The general meeting may decide to also appoint a supervisory board. This must be set out in the articles of association (statuten). A supervisory board monitors the board of directors. It is not mandatory to appoint a supervisory board.
Profits
You distribute the cooperative’s profit in proportion to the work that a member has carried out for the cooperative. The members make agreements about this themselves. Members can bring money into the cooperative through separate member accounts. This member capital is not tradable, unlike shares in a private limited company (BV).
Types of cooperatives
2 common forms of cooperative are the business cooperative (bedrijfscoöperatie) and the entrepreneurs' cooperative (ondernemerscoöperatie).
Business cooperative
A business cooperative supports the business interests of its members in certain areas, for example, procurement, advertising, or jointly processing products in a factory. Well-known examples in the Netherlands are the large dairy cooperatives. The members are affiliated dairy farmers who share in the cooperative's profits.
Entrepreneurs' cooperative
The members of an entrepreneurs' cooperative work independently but can also join forces to take on certain projects. This legal form is ideal for self-employed people without their own employees (zelfstandige zonder personeel, zzp'er). Members can take on assignments or projects that they would not be able to tackle on their own. This also has benefits for the customer who then has a single contact person. An entrepreneurs' cooperative is ideal for small-scale and/or short-term collaborative ventures.
Setting up a cooperative
You can set up a cooperative with 1 or more partners. You need a civil-law notary to draw up a notarial deed including the articles of association. The fees for incorporation by a civil-law notary are not fixed and vary from one civil-law notary to another.
Registration with the Chamber of Commerce, KVK
The notary usually takes care of registering the cooperative in the KVK Business Register (Handelsregister). You pay a fee to register with KVK.
The civil-law notary registers all directors in the Business Register. The civil-law notary also registers the ultimate beneficial owners (UBOs) in the KVK's UBO register. UBOs are, for example, persons with more than 25% of the voting rights.
Please note: if you are acting on behalf of a cooperative that is not yet registered, you are personally liable.
Foreign co-operatives
If you run a cooperative abroad and want to start a branch office in the Netherlands, you do not need to register at KVK. This is not necessary for a branch as the foreign legal structure is recognised in the Netherlands. If you want to start an independent subsidiary of your foreign cooperative in the Netherlands, you do have to register a Dutch legal structure at KVK. This can be a cooperative, but you can also opt for another legal form. Read more about Setting up a branch office or subsidiary in the Netherlands.
Choose a form of liability
When setting up a cooperative, you must also choose how to regulate members' liability. For example, do you opt for a cooperative Excluded from Liability (coöperatie Uitgesloten van Aansprakelijkheid, UA)? You lay this down in the articles of association. See below under the heading Liability for the different forms you can choose from.
Administration and annual reports
You are legally required to keep records. You can do this yourself or outsource it to an accountant. A cooperative must file financial statements with KVK. The information you have to submit depends on the size of your cooperative.
Taxes
One part of is the profit generated by the activities of the members. This 'distributed profit’ (verlengstukwinst) is shared proportionally by the members. So if a member has done a third of the work, he also receives a third of the distributed profit. The other part is the profit of the cooperative itself.
Income tax
Members with a sole proprietorship pay income tax (inkomstenbelasting) on the profits that they make from their business. This includes their distributed profit from the cooperative.
The Netherlands Tax Administration only considers you an entrepreneur if you also have other clients in addition to the cooperative. If the Tax Administration regards you as an entrepreneur for income tax, you are entitled to an SME profit exemption (mkb-winstvrijstelling). If you also meet the hours criterion, you are entitled to more tax benefits, such as the private business ownership allowance (zelfstandigenaftrek). Starters may also be eligible for tax relief for new companies (startersaftrek).
Read more about tax deductions and tax schemes.
Corporate income tax
The cooperative itself also makes a profit. A cooperative has to pay corporate income tax (vennootschapsbelasting) on its profits.
Are you a member of a cooperative with a private limited company (bv)? And do you receive distributed profits from the cooperative? Then the cooperative pays corporate tax on the profits distributed to you. Your bv can use the participation exemption scheme (deelnemingsvrijstelling, in Dutch). This means your bv will not have to pay corporate tax on the profits received.
An architect with a sole proprietorship works with tradespeople in a cooperative. The cooperative takes on a project to remodel a house. The architect does their work and sends an invoice for their material costs and hours to the cooperative. The other members do the same for the services they provide. The cooperative sends an invoice to the customer. This includes the cost for the architect, but also the work of other professionals/members, and an additional amount for the cooperative's own costs.
At the end of the year, the cooperative has money left over, profit. Part of this profit is shared among the members in proportion to how much work they have done. The architect gets a share of this profit. This is the distribution profit, the verlengstukwinst. So, the architect has the turnover from their previous invoice, plus the distribution profit at the end of the year. In addition, the architect has earned turnover from customers other than the cooperative.
They deduct their business expenses from their turnover and then pay income tax on the remaining income from work for the cooperative and other clients. At the end of the year, the cooperative does not distribute all the profits to its members and pays corporate income tax on the amount remaining.
VAT
If the cooperative's activities are subject to VAT, it will get a VAT identification number and a VAT tax number from the Tax administration. The cooperative then charges VAT and files a VAT return. In addition, individual members may also be entrepreneurs for VAT. If that applies to you, you charge VAT when you invoice the cooperative. Whether you are an entrepreneur for VAT depends on your specific situation.
Director’s salary
As a director, you may be employed by the cooperative. The cooperative deducts payroll tax from your salary. Do you have 5% or more voting rights in the members' meeting? Then you have a ‘substantial interest’ and the customary pay regulation (gebruikelijkloonregeling) applies to you. This means your salary must be in line with the work that you do. Read more about the exact rules and conditions of the customary pay regulation (in Dutch).
Liability for debts
Directors' liability
A cooperative is a legal entity, which means that its directors are not usually liable for any debts. There are exceptions to this rule. For example, mismanagement, negligence, or failure to list the cooperative in the Business Register.
Read more about directors' liability.
Members' liability
You agree when setting up the cooperative whether or not members are liable. There are 3 options to choose from:
- UA: Cooperative with excluded liability (coöperatie met uitgesloten aansprakelijkheid). Members are not liable for any debts. This also applies after bankruptcy.
- BA: Cooperative with limited liability (coöperatie met beperkte aansprakelijkheid). Members are liable for debts up to an agreed amount.
- WA: Cooperative with legal liability (coöperatie met wettelijke aansprakelijkheid). Members are equally and jointly liable for debts of the cooperative.
If you choose for WA or BA, the board has to submit a list of its members to KVK every year. This way, creditors know who they can claim their money from.
Signing authority
The board as a whole is authorised to sign. This means that members may either jointly or individually sign contracts. Or perform certain legal acts on behalf of the cooperative, such as reporting a change in the Business Register. These agreements are laid down in the articles of association.
The board can also choose to appoint power of attorney to someone else. This person is then authorised to act on behalf of the company. It can be useful to register this person in the Business Register. This way your business partners also know who is allowed to act on behalf of the company.
Power of attorney
The board can also choose to appoint power of attorney to someone else. This person is then authorised to act on behalf of the foundation. It can be useful to register this person in the Business Register. This way your business partners also know who is allowed to act on behalf of the cooperative.
Personnel
A cooperative can employ staff. You then have to pay payroll taxes and social contributions for your personnel. 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
As a member of a cooperative, you are not an employee. So, you are not entitled to any of the benefits available to regular employees, such as sickness, unemployment, or disability benefits (ziektewet, WW and WIA, respectively). It is up to you to take out disability insurance. If you are pregnant, you are entitled to maternity pay for 16 weeks or more. You can apply for this at the Employment Insurance Agency (UWV). Read about the terms and conditions for maternity pay. Depending on your type of business, it can be wise to take out additional insurance.
You do have national insurance coverage through your income tax. You will receive basic old-age pension (AOW) when you reach retirement age. The AOW is a minimum income. You must supplement this pension yourself. Start as soon as possible to keep your contributions affordable.
Are you a cooperative member with a bv? It depends on your situation whether you are insured for employee insurance.
Employees (non-members) and board members who are employed by the cooperative are insured for employee insurances.
Ending a cooperative
When you wish to end the cooperative, you must first dissolve it. You require a formal decision from the general meeting of members. A dissolved cooperative does not immediately cease to exist. This also requires the payment of debts and benefits (liquidation).
Read more about the dissolution of a legal entity.
Mutual insurance society
The mutual insurance society (onderlinge waarborgmaatschappij) like a cooperative, is a special form of an association. The mutual insurance society may only be used to provide insurance with its members. A mutual insurance society has the same characteristics as a cooperative and you register it in the Business Register in the same way.