The Basics
The Dutch system of incorporation is not unlike its British or American counterparts. A Besloten Vennootschap (‘B.V.’) has a similar legal status to a private limited company (PLC) and an incorporated company (Inc.). The financial exposure of BV shareholders is limited to the value of their shares, and a B.V. can itself enter into legally binding contracts.
In this section you will find basic information pertaining to Dutch corporate law. This is by no means an exhaustive presentation. If you require in-depth advice regarding specific issues, please do not hesitate to contact us.
Shares and shareholders
Shares in a ‘Besloten Vennootschap’ are privately owned, either by one or more individuals and/or legal entities, and can be transferred at any time with relative ease. Even when there is only one shareholder (a sole shareholder), there is no personal liability. A sole-shareholder's name will become a matter of public record however, due to the Dutch Chambers of Commerce's registration policy. If more than one shareholder is appointed, the details regarding the identity of the individual shareholders are kept at the company's office (in an obligatory registry of shareholders).
Liability issues
The liability of any shareholder is normally limited to the amount of his/her share in that company. However, a provision is made. When, upon liquidation of the company (especially in bankruptcy cases) it is concluded that a shareholder (who was at some point also appointed as a manager or director, i.e. a function in which he had control over the actual operations) has not complied with rules and regulations, he can be held personally accountable. Our advisors can fully advise you on the specific requirements that need to be met to mitigate this risk.
Corporate tax law
In recent years, the Dutch fiscal system has been modernized, making for an even more attractive corporate climate. And the corporate tax rate, currently at 25.5 %, is expected to drop even further. The Netherlands also offers a wide range of tax breaks and fiscal practices to further reduce the amount of taxes that needs to be paid. The option to form a ‘fiscal unity’ and a specific regime for investment funds are among the many possibilities that our fiscal specialists can inform you about.
Specific requirements
In order to register as a BV, a company must meet several criteria. Most importantly, there is the requirement for a minimum reserve capital of € 18,000. This capital is considered an investment in the newly formed company. However, this reserve may also be used to cover operational costs, and reserve funds can even be lent out to another company. Thus, the reserve funds are not tied up, and there is no real ‘cost’ to setting up a business.
Protection from third parties
Shares in a Besloten Vennootschap are unlisted and can only be transferred by public notary. It is therefore quite difficult for third parties to obtain an interest in your company, allowing for a safe, yet flexible corporate structure.
Two setup methods
We offer you the choice between two easy and transparent setup methods. If you have a working knowledge of the Dutch requirements, and simply require a helping hand to guide you through a swift incorporation process, our Basic BV® package is made for you. If you require additional assistance, or if you wish to set up a complex structure that needs a local specialist's advice, our Premium BV® package is for you.
Before a company is fully incorporated, it passes through an ‘establishing’ stage. In this stage the company can already conduct business and enter into contracts. However, the company is not yet recognized as a distinct legal entity. While in the ‘i.o.’ (i.e. ‘establishing’) stage, registered company-owners are still personally accountable (and liable) for all actions undertaken by their company:
De Besloten Vennootschap in oprichting (BV i.o.)
The aforementioned advantages only come into effect once the BV is fully incorporated. In the initial stages, the company enters a state of ‘becoming established’. This state is officially known as ‘in oprichting’. In most cases, it is necessary to register the company before full incorporation. Typical reasons are the desire to enter into contracts (i.e. renting an office; conducting business) and/or setting up a bank-account. In this stage the founders are fully liable for all actions that their company undertakes. The BV does not become a legal entity until it is registered as such by a notary. In addition to this, ‘borrowing back’ the share-capital is strictly limited in the ‘i.o’ stage.
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