Dutch Business Structures
There are different types of business structures in the Netherland. We will describe the main characteristics of each in the following lines.
Sole Trader (Individual Business Owner)
A sole trader (Eenmanszaak) is the single owner of a business, even if it can have employees. The income tax is based on the profits. This kind of trader can be personally responsible for business obligations but their spouse can be responsible as well. We can also find this type of sole proprietorship referred to as ZZP. A term used quite often even though it is not a legal one.
Partnerships are usually organized between certain professionals, like attorneys and GPs. To calculate the tax, partners are treated as self-employed entrepreneurs (ZZPers). Partners are personally responsible for financial obligations but their spouses can be liable too. Still, a marriage contract can limit liability.
General Partnership (Vennootschap Onder Firma, VOF)
A general partnership refers to a business led by several persons. They will agree to certain terms about their contributions, liability, and entitlement.
Each of the partners will be considered a self-employed entrepreneur when calculating the taxes. The income tax, in this case, is payable on profits
There will be a mutual agreement for each to be personally liable for business debts and requirement but a marriage contract can assure spouses goods.
Limited Partnership (Commanditaire Vennootschap, CV)
In a limited partnership, a company is run by several persons. There can be active partners or limited ones.
The limited partners usually have the role of financial backers for the enterprise, and generally, enter into a partnership with a sole trader who needs fiscal backing. The limited partner generally allows the active partner to make the little decisions and they only risk losing their monetary investments if they don’t involve themselves in the company management at all. Limited partners are not obligated to register with the Trade Register.
It is best to have a partnership agreement when you become a partner. This way, the duration will be clear for all parts as well as the contributions and the profit each will have. For taxes, the active partner is considered a self-employed entrepreneur and has to pay taxes according to their share from the profit. A limited partner who only gave money to the company is considered a joint entitlement.
Private Limited Liability Company (Besloten Vennootschap, BV)
This type of company is seen as a legal entity and because of this, the owner risk is minor. Anyone having shares in the company is only responsible for the monetary contribution they made. You need €18,000 to start a BV and the shares are based on the capital. Anyone who has more than 5% of shares is liable for taxes on capital gains or dividends paid.
Owners need a background check from the Ministry of Justice because BV are often used by foreign firms to set a subsidiary.
Also, when you want to start a BV, you need to go through the Chamber of Commerce Trade Registry to make sure the name that you chose is available and appropriate. The name of the company needs to have “BV” at the beginning or at the end.
Public Limited Liability Corporation (Naamloze Vennootschap, NV)
It is allowed to be a subsidiary of a foreign company. A Naamloze Vennootschap is owned by shareholders and you can buy or sell shares on the public stock market. The owners of the shares can remain anonymous as their shares don’t hold their name. You don’t encounter this type of business structure very often and you need €45,000 paid-in capital to start it.
A foreign company can do business in Netherland through a branch office. In this case, the foreign office will be responsible for the branch office obligations. You don’t need government approval, only for the branch and the branch manager to register at the Chamber of Commerce Trade Register.
This kind of structure is mostly assumed by non-profit organizations because its seen as a legal entity without members. Although you can make some money through this kind of organization, is used more to cover costs. For this type of organization, you will have corporate tax and sometimes turnover tax.
The purpose of this non-profit structure is voting members who are usually allocated one vote. All the earned money needs to be used for the association objectives. There can be taxes on profits.
This association can be organized with or without a notary and registration with the Chamber of Commerce Trade Register, the legal rights depending on this.