Foundation

What is a foundation?

A foundation is an organisation with a social, societal or ideological purpose. A foundation does not aim to make a profit. However, a foundation may make a profit if this profit is used to achieve the foundation's purpose.

Board

A foundation always has a board of directors. If you decide to also appoint a supervisory board, you must lay this down in the articles of association (statuten). A supervisory board monitors the board of directors. It is not mandatory to appoint a supervisory board.

A foundation has legal personality. This means that the board members are usually not liable for any debts with their personal assets.

No members or shareholders

Unlike the association, a foundation has no members. As a result, there is no need for a members' meeting to take important decisions. A foundation's money comes from donations, loans, subsidies and legacies. A foundation has no shareholders.

Besides being used as a legal form for charities, the foundation also has other uses For example, professional football clubs, broadcasting companies, hospitals, museums, laboratories, and healthcare institutions can also be a stichting.

Setting up a foundation

You will need a civil-law notary to set up the foundation. They will draft a deed of formation, stating that you have created a stichting. The civil-law notary will also draw up the its articles of association. These contain rules about how the foundation will operate, such as how directors are appointed and dismissed. Setting up a foundation at a civil-law notary costs between €500 and €1,500.

You can set up a foundation alone or together with others. Someone else can also set up a foundation on your behalf after your death. You must state this wish in your will. A legal person, such as a private limited company (BV), can also set up a foundation. You do not need any minimum starting capital for a foundation.

Registration in the Business Register

The civil-law notary will usually register your foundation in the Business Register (Handelsregister) at KVK. You pay a one-time fee to register your foundation in the Business Register.

The civil-law notary also registers all board members in the Business Register. You remain personally liable until you have done this. If your foundation runs a commercial company, you must also register it in the Business Register.

UBO register: report your UBOs

Upon formation, the civil-law notary also registers the ultimate beneficial owners (UBOs) in the KVK's UBO register. UBOs are, for example, persons who have direct or decisive influence on the foundation.

Administration

You are legally required to keep records. Does your foundation have commercial activities and 2 consecutive years of annual turnover of at least €6 million? Then you mustfile your financial statements with KVK. The information you need to file depends on the size of your business.

Taxes

A foundation without commercial activities does not pay tax. If you also run a business and carry out commercial activities, your foundation usually pays corporate income tax (vennootschapsbelasting) on profits. In this context, a 'business' is any organisation running on capital and labour for the purpose of making profit through commercial activities and economic transactions. Any profits must be allocated to the foundation's cause or purpose. Not all foundations have to pay corporate income tax. Whether a foundation has to pay and charge VAT depends on its specific situation (in Dutch).

You can make use of corporate income tax deductions, such as various forms of investment credit.

Liability for debts

A foundation is a legal entity, which means that its board members are theoretically not liable for any debts. There are, however, exceptions to this rule. For example, mismanagement, negligence, or if the foundation has not yet been registered in the Business Register. As a director, you can insure yourself against risks.

Find out more about the liabilities of boardmembers.

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 foundation. For example, reporting a change in the Business Register. These agreements are laid down in the articles of association.

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 foundation.

Personnel and volunteers

A foundation 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.

Does your foundation work with volunteers? If so, you must comply with the conditions for volunteering.

Board members can also be paid employees of the foundation. A director is in paid employment if they have an employment contract, carry out work, and receive compensation for it. The compensation must be in proportion to the work performed. The director is then not allowed to make decisions independently.

Director at foundation with ANBI status

The rules for (managing) directors at a foundation with ANBI status are different. If the foundation has a Board of supervisors in addition to the board, a director may be employed by the foundation. Does the foundation only have a board? Then a director may not be an employee. Usually, directors only receive compensation for expenses incurred.

Social security and national insurance contributions

Board members employed by the foundation are covered by any employee insurance schemes. If you are not employed, you can take out voluntary insurance. You can also build up a pension yourself.

Ending a foundation

If you want to end your foundation, the board first has to decide on dissolving the legal entity. A dissolved legal entity does not immediately cease to exist. The legal entity is not terminated until all debts and payouts have been paid. Do assets remain? You have determined in the articles of association where that money goes.

Read more about dissolving a legal entity.

Do you want to amend the articles of association? This is decided by the board. In the articles of association you have laid down how the board can amend the articles of association. The notary verifies the changes and implements them.

Does the composition of your board change? Report the board change to KVK within 8 days. Resigned directors who are still in the Business Register run the risk of being held liable.