European business structures

This information is provided by

Netherlands Chamber of Commerce, KVK

If your company is active in more than one European country, you may benefit from setting up a European business structure. There are three options. This article tells you what they are and how they work.

You can run your business across more than one EU country without setting up a network of subsidiaries. Or transfer your registered office to another EU country without having to dissolve the company. You can even create one or more subsidiaries that are also European Companies.

The Societas Europaea (SE)

What is a European Public Limited Company (Societas Europaea, SE)?

The European public limited liability company (Societas Europaea, SE) is a business structure for companies with international activities. This business structure exists in all countries of the European Union. Only a legal entity (rechtspersoon in Dutch) can form an SE. Companies from different EU countries that want to merge can do so more easily if they set up an SE together. It also makes it easier to set up a holding company or a joint subsidiary together.


The SE is not tied to any EU Member State. It is possible to move the official address of the company (registered office) to another country. The SE does not need to be dissolved or re-established for this. The assets of an SE are divided into shares, which are owned by the shareholders. You need €120,000 starting capital to set up. The rules of the Member state where the SE is established apply to the preparation, auditing and publication of annual accounts. The directors take care of the day-to-day management of the company. An SE can also have a supervisory board that supervises the management (two-tier board). In other cases, the supervisors are part of the board (one-tier board).

How do you set up an SE?

A minimum of 2 companies, governed by the laws of different Member States, is required for setting up an SE. Companies can also set up an SE if they have run a subsidiary under the law of another Member State, or have an establishment there for at least 2 years. You can set up an SE in the EU by:
  • a merger
  • the establishment of a holding company or subsidiary
  • conversion of a public limited company into an SE
The SE becomes a legal entity after registration in the Commercial Register (Handelsregister) of the Netherlands Chamber of Commerce KVK. Business structures without a legal personality (such as entrepreneurs with a sole proprietorship or commercial partnership) cannot establish an SE. The SE is governed by the rules laid down in the Statute for a European Company that applies as law in the Netherlands. The Dutch rules for a public limited company (naamloze vennootschap, nv) apply to all matters that are not in the regulation.

Register at the Netherlands Chamber of Commerce KVK

Does the SE have its registered office in the Netherlands? Then registration in the Commercial Register is mandatory. The SE must comply with the set-up requirements and there must be agreement about the arrangements for the employees.

Taxes

An SE pays taxes in those countries where the company is permanently established.

Publication obligation

An SE has several publication obligations, such as:
  • Publication of the foundation, amendment of the articles of association and dissolvement in the Dutch Staatscourant
  • Publication of the registration, cancellation and transfer of seat in the Official Journal of the EU

The Societas Cooperativa Europaea (SCE)

What is the European Cooperative Society (Societas Cooperativa Europaea, SCE)?

The European cooperative society is a European legal form with characteristics of the cooperative and the public limited company (naamloze vennootschap in Dutch). SCE cooperatives can set up new cooperatives at European level for activities in several countries more easily. The SCE is not tied to any EU Member State. This makes it possible to move the official address of the company (registered office) to another country. The SCE does not have to be dissolved or re-established. The rules of the Member State where the SCE is established apply to the preparation, auditing and publication of annual accounts. The capital of the SCE consists of the shares of its members. The members jointly contribute at least €30,000.

How do you set up an SCE?

You can start an SCE:
  • with at least 5 natural persons residing in at least 2 Member States
  • with a combination of natural persons and legal entities. In that case, you need at least 5 natural persons, legal persons and / or companies residing in or governed by the law of 2 Member States
  • with at least 2 legal persons and / or companies, if these are governed by the law of at least 2 Member States
  • by a cross-border merger between cooperatives from at least 2 Member States
  • by conversion of a Dutch cooperative into an SCE, if it has had a branch or subsidiary for at least 2 years under the law of another Member State

To set up an SCE, a notarial deed is required and the Ministry of Justice and Security must issue a 'certificate of no objection'. You can set up an SCE in all EU countries. A European regulation applies, the Statute for a European Cooperative Society. Any matters not regulated by this regulation are governed by the law of the country in which the registered office of the SCE is located. The central board must also reside in this country.

For an SCE with its registered office in the Netherlands, registration in the Commercial Register of the Chamber of Commerce is mandatory. Registration is only allowed after all set-up requirements have been met and agreements are in place about the arrangement of the employees.

Taxes

An SCE has the same tax status as any other multinational company and must therefore pay taxes in those countries where the company is permanently established.

Brexit

Do you run or take part in an SE, SCE or EEIG, and are there any British partners involved? Then you need to take into account the effects Brexit has on your European company. Read more information on the EU website about the Brexit transition.

The European Economic Interest Grouping (EEIG)

What is a European Economic Interest Grouping (EEIG)

Companies from the EU or with a subsidiary in the EU can set up a European Economic Interest Grouping (EEIG) to develop or improve their economic activities together. For example, by bringing together resources, activities and expertise. Profit for the EEIG itself cannot be a goal. That is why an EEIG may not:
  • have control over the cooperating companies
  • be a holding company of the member companies
  • have more than 500 employees
  • be a member of another EEIG

How do you set up an EEIG?

A private or (preferably) notarial deed is required for the incorporation contract. It contains the following:
  • name of the partnership, preceded or followed by the words 'European Economic Interest Grouping' or 'EEIG'
  • location of the registered office
  • the purpose of the EEIG
  • name, trade name, business structure, place of residence or registered office of each of the members. Is a member registered in a trade register? Then the corresponding number and place of registration must be included in the deed. duration of the partnership. An EEIG without a pre-determined duration period is set up for an indefinite period.

Registration at the KVK

An EEIG established in the Netherlands is a legal entity. This may be different in other EU countries, because the legislation differs from country to country. Registration in the Commercial Register is mandatory for an EEIG established in the Netherlands.

Board

An EEIG has at least two bodies: the jointly acting members and the director(s). The powers of the board are stated in the articles of incorporation. In principle, each member has one vote. Certain members may have more votes, but no member may have a majority. Both natural persons (individuals) and legal persons may manage an EEIG established in the Netherlands.

Profit distribution

Profit and loss are divided according to the agreements in the cooperation contract, or otherwise in equal parts. It is sensible to include provisions in the cooperation agreement about:
  • Adopting the annual financial statements
  • The moment at which the members are entitled to profit distribution or have to settle a loss

Liability

All members of an EEIG can be jointly and severally liable with their private assets for all debts in addition to the EEIG. Creditors of individual members cannot claim the assets of the EEIG. Creditors of the EEIG can claim members’ assets if the assets of the EEIG are insufficient.

Taxes

Only an EEIG’s members are liable for tax over the EEIG’s income, either via income tax (natural persons) or corporate tax (legal persons). The EEIG itself does not pay corporate tax.

Social Security

In some cases, an EEIG must pay wage tax and contributions for social security for natural persons who are members of the partnership. To what extent this is the case depends on the position they have in their own company.

Members entering and leaving

The EEIG’s members decide on the admission of new members. New members are also liable for debts incurred by the EEIG prior to joining. A member can only leave the EEIG in accordance with the provisions of the founding agreement, or (if none exist) with the unanimous approval of the other members. Exclusion of a member is possible:
  • for reasons stated in the EEIG founding agreement
  • in case of serious failure to meet the obligations
  • if the partnership has been seriously disrupted or threatens to be disrupted
  • Exclusion is only possible through a decision of a judge at the joint request of the majority of the other members (unless the founding agreement provides otherwise). A member who is a natural person also ceases to be a member of a partnership by failing to meet the legal conditions for participation in an EEIG.

More information

To find out if an EU legal structure is a good idea in your situation, consult your legal advisor, or talk to the KVK Advice Team. You can reach the KVK Advice Team on 0800 2117, Mon-Fri from 8:30 to 17:00 hours. Calling from abroad? Dial +31 (0)88 585 2222.

Questions relating to this article?

Please contact the Netherlands Chamber of Commerce, KVK

This information is provided by

Netherlands Chamber of Commerce, KVK