The association

What is an association?

An association is an organisation with at least 2 members who want to work together to achieve a social aim. For example, playing sport, organising activities for the local community, or protecting the natural environment.

An association may make a profit, but this must not be its goal. Any profit must be reinvested into the association. You are not allowed to divide any profits amongst members.

How does an association work?

Every association must hold a general members' meeting at least once a year. During this meeting, decisions are taken about the organisation. Each member has 1 vote at the general members' meeting. The members appoint the board during the general members' meeting. In doing so, they decide for themselves how many managing directors to elect. These are often a chairperson, a secretary, and a treasurer.

The board manages the association. An association does not have shareholders. The association’s funds come from the membership fees paid by members, as well as, for example, donations and fundraising campaigns.

Read more about the duties and rules for the vereniging’s board at KVK

Types of associations

There are 3 types of associations in the Netherlands:

Association with full legal capacity

An association with full legal capacity (volledige rechtsbevoegdheid) is a legal entity. This means, for example, it can buy property, take out loans, and receive an inheritance. Directors and committee members are not liable privately, except in case of mismanagement. You set the association up with a civil-law notary.

Association with limited legal capacity (informal association)

You set up an association with limited legal capacity (beperkte rechtsbevoegdheid) without a civil law notary. An informal association has fewer rights and cannot, for example, buy property. If you do not register this type of association in the Business Register, the directors are liable privately. If you do register an informal association, then both the association and the directors are liable.

Owners' association

All apartment owners in the Netherlands are required to be members of an owners' association (Vereniging van Eigenaars, VvE). The VvE is responsible for shared tasks, such as the maintenance of the building and its technical installations. A VvE also has a number of obligations. It must hold a meeting at least once a year. The VvE must also build up a reserve fund and draw up a financial statement. Every VvE must be registered in the Business Register. Read more about the Owners’ Association.

Setting up an association with full legal capacity

You must pay a civil law notary to set up an association with full legal capacity. They will draft a deed of formation. The deed of formation must include at least the following:

• the name of the association
• the purpose of the association
• how people can become members
• what happens to the funds if the association is wound up
• the articles of association (statuten), which set out the rules and agreements governing the association

Registering with KVK

The notary will then arrange to register your association in the Business Register (Handelsregister) at KVK. You pay a one-time fee to register with KVK.

The notary also registers all directors or committee members. Please note: as long as the association is not registered in the Business Register, you remain personally liable.

On incorporation, the notary also registers the ultimate beneficial owners (UBOs) of your association in KVK's UBO register. UBOs are, for example, people who have direct or decisive influence on the association.

Setting up an association with limited legal capacity

You do not need a civil-law notary to set up an association with limited legal capacity. Nor do you have to register the informal association in the Business Register. You can, however, limit the liability of members by registering in the Business Register. An association with limited legal capacity does not have to register UBOs.

Administration

You are legally required to keep records. You must retain these for at least 7 years. The records consist of:

• The membership register. This is where you keep members’ personal details and membership fees.
• A financial statement or annual report. This sets out all the association’s income and expenditure.

The treasurer must present the financial statement at the general meeting.

Check if you must pay taxes

Corporate income tax

An association without commercial activities does not pay tax. An association operating as a business usually pays corporate income tax (vennootschapsbelasting, VPB). You can make use of tax deductions, such as investment allowances. Any profits must be allocated to the association's objective or purpose. Not all associations have to pay VPB. Read which associations are exempt.

VAT

Whether an association has to pay and charge VAT or not, depends on its specific situation (in Dutch).

Who is liabile for debts

An association with full legal capacity has a legal personality. This means that its directors are usually not liable for any debts.

There are exceptions. For example, directors are personally liable:

• in the event of mismanagement
• if the association has not yet been registered in the Business Register
• if it is an association with limited legal capacity

Read more about the liability of directors.

Please note: you must inform KVK about any committee member changes within 8 days. Former committee members could be held liable if they are still listed in the Business Register.

Liability for association with limited legal capacity

If your association has limited legal capacity, then you as a member are personally liable with your private assets. You can limit the liability by registering the association in the Business Register. In that case, the association is liable first and then the members.

Who is authorised to sign in the name of the asociation?

The committee as a whole is authorised to sign. This means that directors may jointly sign contracts or perform certain legal acts on behalf of the association.

An association's directors do not automatically have independent signing authority. However, you can specify this in the articles of association.

Power of attorney

The committee can also choose to appoint power of attorney to someone else. This person is then authorised to act on behalf of the association. 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.

Personnel

Associations 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.

Employing directors

Committee members are often volunteers. However, an association may also employ a director. In that case, the director must work on behalf of the association and receive a salary commensurate with the work they carry out.

Different rules for directors of organisations with ANBI or SBBI status

The rules for directors of an association with ANBI or SBBI status are different. In such cases, committee members are not permitted to be employed by the association. They are usually only reimbursed for expenses incurred. .

Social security and national insurance contributions

Directors employed by the association 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 an association

If you want to end your association, a general meeting of members must first decide to dissolve the legal entity. A dissolved legal entity does not immediately cease to exist. The legal entity is only terminated when 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 ending your association..