Are you going to set up a business? Perhaps the Netherlands is an interesting location. The country has a stable and robust economy and low corporate tax rates.
In many cases, a private limited liability company, or BV (comparable to a limited liability company), is the most appropriate form. A private limited liability company is a legal person. This means that the BV is in principle liable for any debts of the company, and that there is no possibility for recourse against the shareholder. As a director you are fully responsible for the daily policy and long-term strategy of the BV and you may represent the BV. It is possible to start a private limited company by yourself or with other private persons or legal entities.
The capital of a BV is divided into one or more shares held by shareholders. They have ultimate control over the BV they have the authority to appoint and dismiss the directors. A private company with limited liability can have a supervisory board to supervise the board of directors (a so-called two-tier board), or the supervisors can be part of the board (a one-tier board).
With limited companies, the director is often also the sole shareholder. In that case you are director and major shareholder (DMS), or directeur en grootaandeelhouder (DGA) in Dutch. You can also choose to have more board members and to divide the tasks. This with the caveat that as a director you always have financial responsibility. There are no legal requirements for the number of directors for Dutch BVs. The same goes for the number of participants. Note that a different tax regime may apply to shareholders with an interest of less than 5% in a BV.
Starting and registering a Dutch limited liability company
You cannot set up a BV without the help of a notary or company formation specialist . In accordance with the Dutch civil code, the deed of incorporation must be executed by a notary. Find a good company formation agent or corporate services company. If the founders reside remote from the Dutch notary, it may be practical if the founders grant a power of attorney to the notary. This power of attorney must be legalized by a local notary.
There are five stages in setting up a Dutch limited liability company:
– Renting commercial premises or solely a registered address for the new BV, see here for a registered address Amsterdam ;
– The drafting of the articles of association and the deed of incorporation shall be passed by a notary;
– Make a deposit of a minimal starting capital of € 0.01, in cash or in kind. The cash payment can be made in advance on the notarial third-party account or after incorporation on the newly opened bank account of the company;
– Registration with the trade register of the chamber of commerce, performed by the notary. The founder remains personally liable until the registration has been processed;
– Registration with the tax authorities, which in principle is being executed automatically for corporate tax and turnover tax on the basis of the information in the trade register. For payroll tax, a separate application must be sent to the local tax office.
A BV in formation
It is possible to start activities before the civil-law notary has established the BV, provided that the civil-law notary declares to take care of the incorporation for you and the BV is subsequently registered in the trade register of the Chamber of Commerce. You may then perform activities on behalf of a ‘BV under formation’ or in Dutch ‘BV in oprichting’ or abbreviated ‘BV io’
When entering into contracts with business partners, make sure that you explicitly state that you are acting on behalf of a ‘BV under formation’. Any contracts are entered into as a BV under formation. You are hereby personally liable for the obligations of the BV under formation. Once the BV has been registered, you can transfer the obligations in full to the BV by means of a ratification decision of the board.
