Private limited company (BV) in the Netherlands
Do you want to set up a Dutch BV? A BV is a legal entity, equivalent to the private limited company. You can set up an BV either on your own or with others. With a BV, your business’s creditors usually have no claim on your personal assets. The BV’s capital is divided into shares, which you can also use to attract investors. You do not need any start-up capital.
On this page
- What is a private limited company or BV?
- The BV's capital is divided into shares
- Liability for a BV’s debts
- Setting up a BV
- Costs
- Finance matters and taxes and the BV
- Who is authorised to sign contracts on behalf of a BV?
- Hiring staff for your BV
- Dutch insurances and pension
- Sole proprietorship or BV?
- Ending or converting a BV
- Frequently asked questions about BVs
- Statistics: private limited companies
What is a private limited company or BV?
A private limited company, or in Dutch a besloten vennootschap (BV), is a business structure with legal personality. This means that the business has its own rights and obligations under the law. If there are debts, the BV is usually liable, rather than the managing director(s) personally. You can set up a BV on your own or with others.
The BV's capital is divided into shares
Shares represent ownership stakes in the business. The shareholders are therefore the owners of the business and are often also entitled to a share of the profits. Are you setting up a BV on your own? In that case, you are the sole shareholder.
When you set up the BV, you decide how many and which shares to issue. There are various types, such as:
- shares entitling the holder to a share of the profits and voting rights
- shares entitling the holder only to a share of the profits (without voting rights)
- shares entitling the holder only to voting rights (without a right to a share of the profits)
Shareholders with voting rights make decisions at the general meeting of shareholders.
Management of a BV
The day-to-day management of a BV is in the hands of the managing directors. A BV may also have supervising authorities. In the case of small BVs, there may be only 1 managing director.
Do you hold more than 5% of the shares and are you a manager director? In that case, you are a director-major shareholder, in Dutch directeur en grootaandeelhouder (DGA).
> How to organise the board and supervision of your organisation
Liability for a BV’s debts
Usually, the BV is liable for its debts, not the managing director(s) personally. This means that the business’s creditors have no claim on your personal assets. There are, however, exceptions, for example:
- if you have not performed your duties as a managing director properly
- if the BV has not yet been registered in the Business Register
- if you have personally co-signed a loan for the BV and the BV is unable to repay that loan
> Read more about managing directors’ liability
Setting up a BV
You set up a BV through a civil-law notary. This can be done in person or online.
You agree on the basic rules
The civil-law notary draws up a document for the incorporation. This also includes the articles of association. These are the basic rules for your organisation, such as
- the name and location of your BV
- the number of shares
- how managing directors are appointed
You will also receive a shareholders’ register from the civil-law notary. This is a document setting out how the shares are allocated.
The civil-law notary registers your business with KVK
The civil-law notary registers your BV and all managing directors with KVK’s Business Register.
The civil-law notary will also register the ultimate beneficial owners (UBOs) of your BV with the KVK’s UBO register. A UBO is someone who owns the organisation or has the power to make decisions on its behalf.
KVK will pass the details on to the Netherlands Tax Administration.
Are the BV’s activities subject to VAT? If so, you will receive the VAT numbers from the Netherlands Tax Administration.
Trading before your BV is incorporated
You can conduct business through your company even before the BV has been incorporated. In that case, you must register your BV with KVK as a BV in the process of incorporation (in oprichting, i.o.). Always make it clear to your business partners that you are entering into contracts on behalf of the BV.io.
Sometimes sole proprietorships use BV i.o. next to their name while in the process of incorporating their BV. Be aware that you are entering into an agreement as a sole proprietorship or eenmanszaak when you sign a contract in this phase.
Costs
The costs for starting and running a Dutch BV are:
- Registration fee for the KVK Business Register
- Civil-law notary’s fee (varies; could be anything between €500 and €1,500)
- Bookkeeping / accounting fee (varies; usually between €600 and €1,800 per year)
Starting capital on incorporation
As starting capital, you pay at least €0.01 into the company. This can be done in cash, but also in kind, for example by contributing goods. Their value is then expressed in money and belongs to the company.
Finance matters and taxes and the BV
You must keep business records for your BV. These records must meet a number of legal requirements. For example, you must keep your records for 7 years.
Depositing financial statements
Like any business, private limited companies have to keep records. BVs also have to produce financial statements and deposit them with KVK. Which data you have to submit depends on the company size.
As a legal personality, the BV will also have to file VAT returns (aangifte omzetbelasting), usually every quarter, and pay VAT over profits made. If the BV has an annual turnover of up to €20,000, you can make use of the small businesses scheme (KOR). In that case, you do not charge or pay VAT.
As a (managing) director, you are employed by the BV. The BV deducts payroll taxes from your salary. This is an advance levy for box 1 of the income tax.
Customary salary
If you own at least 5% of your company's shares, then you have a 'substantial interest' (aanmerkelijk belang) and are referred to as a 'director and major shareholder' (DGA). The Netherlands Tax Administration will then not allow you to pay yourself an excessively low or zero salary. Your salary must be in line with market conditions. This is referred to as the gebruikelijkloonregeling or 'customary salary scheme' (in Dutch) for directors and major shareholders.
Your BV will have to pay corporate income tax (vennootschapsbelasting) over its profits. You have to file a corporate tax return for your BV once a year.
The BV can make use of various tax deductions for the corporate income tax, such as different forms of investment credit.
Paying out part of the profits
If the BV pays out part of its profits to the shareholders (a dividend), it pays dividend tax on the amount to the Tax Administration. The BV withholds this tax from the dividend.
Receiving a share of the profits
Do you receive a dividend? If so, you will be liable for tax on the dividend received under box 2 of your income tax return. You can set off the dividend tax withheld by the BV against this income tax.
See more information about paying taxes in the Netherlands.
Who is authorised to sign contracts on behalf of a BV?
The board consists of all the managing directors collectively. The board is authorised to handle official matters on behalf of the business, such as signing contracts or notifying KVK of any changes.
In addition, each managing director is also authorised to handle official matters independently, i.e. on their own.
Do you not want every managing director to be able to handle matters independently?
If so, you can set out arrangements regarding this when the BV is established. You should include these arrangements in the articles of association.
Do you also want someone outside the board to be able to handle official matters?
Directors can also give someone else power of attorney. This person may then also act on behalf of the company. It is not mandatory to register this person with the Business Register, however, it can be useful. It means your business partners know who is allowed to act on behalf of the company.
Hiring staff for your BV
A BV can hire personnel. You must then:
- register as an employer with the Tax Administration
- report this to KVK.
- pay Dutch payroll taxes and social contributions for your employees
> Read more about hiring employees for the first time
Dutch insurances and pension
Are you a director and major shareholder (DGA)? Then you may have mandatory insurance under the employee insurance schemes, the Sickness Benefits Act and the Unemployment Benefits Act, just like other employees. In some cases, however, you may not be required to have mandatory insurance as a manager director. This is the case if you:
- have so many shares (possibly together with your spouse), that you cannot be fired against your will;
- together with your immediate family members, own two-thirds or more of the votes to be cast;
- are a director, hold the shares together with all other directors, and all shareholders participate equally in the company.
In this case, you can take out insurance yourself. Read more about insurances and pension as a sole proprietor.
> Read more about the DGA and employee insurance schemes
Are you pregnant?
Then the BV does not have to continue paying you. You can take out voluntary Sickness Insurance for maternity leave with UWV or you may be eligible for maternity pay for the self-employed.
Pension
For some professions and business sectors, you as an entrepreneur are also obliged to participate in a pension scheme. In addition, you can take care of a supplementary pension yourself, with the purchase of annuities, for example, or by saving up money independently.
Sole proprietorship or BV?
Many starting entrepreneurs are unsure whether to set up a BV or a sole proprietorship (eenmanszaak). Which option suits you best depends on your situation.
Read more about the advantages and disadvantages of an eenmanszaak and a BV.
Or use our Tool for choosing a Dutch legal structure to find out which option suits you best.
Ending or converting a BV
If you want to end the business, you must wind up the BV and deregister it with KVK. You must also settle your accounts with the Netherlands Tax Administration.
Please note: do not simply deregister the BV. If you do, you will, for example, no longer have access to your business bank account. First, read what you need to arrange if you want to end your BV.
Changing the legal structure of a BV
You can convert your eenmanszaak into a BV. Reasons for doing so include:
- You want to reduce your personal liability.
- As your profits grow, a BV may offer tax advantages.
- You want to sell your business in the future.
The main difference is that the BV will now run the business instead of you personally. You will be issued with a new KVK number for the BV.
Read more about the different ways to convert an eenmanszaak into a BV.
Are your profits lower than expected, or are you planning to scale back your activities? In that case, you can also convert a BV into an eenmanszaak. If your profits are lower, a sole proprietorship is often more tax-efficient.
Doyou want to be able to attract more capitalY You can change your BV to a public limited company (NV), for example. To change a BV into an NV, you must amend the articles of association and have a deed of conversion drawn up by a civil-law notary. Check with the civil-law notary what other steps you need to take.
If you want to sell your company, you have 2 options:
- you can sell your shares. You then pay income tax over the return from the sale.
- divest the business from the BV by selling off its equipment, inventory, etc. You then have to pay corporate income tax on the (book) profit.
Frequently asked questions about BVs
Do you want to spread your risk? If so, you can set up a second BV alongside the one you operate through: the holding BV.
- You can, for example, place your profits or pension funds within the holding BV.
- The holding BV owns the shares in the operating BV.
If the operating BV runs into difficulties, the assets held by the holding BV remain outside the scope of bankruptcy proceedings.
Do you want to make a distribution from the BV, for example to pay dividends to shareholders? Or to buy back its own shares? If so, the board must check 2 things:
- whether there is still sufficient cash remaining, in addition to the reserves required by the articles of association and the law ( balance sheet test, balantstoets in Futch)
- whether the business can still meet its debts for approximately 1 year following the distribution ( payment test, uitkeringstoets in Dutch)
If the board does not formally approve the withdrawal of funds and you give it anyway, you may be held personally liable for any debts.
The meeting of shareholders can decide not to distribute profits because it wants to strengthen the financial position of the BV. The profit then goes to the (general) reserve.
If there is also a separate shareholders' agreement, it may contain provisions about how the BV handles its profits. These may be different from the provisions in the articles of association.
You may borrow money from the BV. However, the loan must comply with commercial terms. For example:
- the BV charges commercial interest
- you set out the terms in a contract
- you agree on the repayment of the loan
Are you borrowing more than €500,000? If so, you will pay income tax on the amount above this threshold via box 2 (substantial interest). There is an exception for financing your own home. Read more about borrowing from your own BV (in Dutch).
To get extra money, the BV can issue more shares. The person who receives the shares must pay the BV for them.
Please note: the BV's articles of association may contain an authorised capital. The authorised capital is an amount that indicates the maximum number of shares that may be issued.
Note: Be aware that for tax purposes, the Netherlands Tax Administration views changes in legal structure as ending 1 business and starting another.
More information
Do you still have questions about starting or running your BV in the Netherlands? Call KVK for help and advice: 088 585 22 22, or consult a financial adviser.
Statistics: private limited companies
Number of private limited companies.