So you’ve decided to create a company in the Netherlands — congratulations! It’s a great first step, and we’re sure you’ll have your business up and running in no time. Just one thing first: what type of company will you choose?
The type of company you choose will impact everything to do with how your business is set up, how you pay taxes, and how you can make money. And if you’re a freelancer or self-employed, you still need a company. So will you have a general partnership, professional, or limited? Do you need to register your Dutch company? We’ve got the quick guide to the most common Dutch company types — in simple language. Let’s dig in!
Most common business structures in the Netherlands:
There are many types of companies in the Netherlands, but most often people choose a:
If you’re starting out as an entrepreneur, this is likely the Dutch company structure for you. A sole trader is a company structure that doesn’t have a legal personality — that means that you are responsible and liable for the company, its finances, and its debts. Here are the key points:
- While you are limited to one sole proprietorship, you can operate under different trade names.
- You need to register with the Netherlands Chamber of Commerce (KVK) — this costs €50.
- You must pay income tax on your profits, and pay VAT. If you earn under €20,000 per year you can apply not to pay VAT using the small business scheme (KOR).
- You can still employ staff.
A BV company structure makes you the director of your company, and therefore an employee. This means that when you set up your Dutch BV company, the company is generally liable for any debts (instead of yourself as an individual). The equity of the company is divided into shares owned by shareholders — or you (as director) can be the only shareholder. You should know:
- You have to use the services of a civil-law notary to set up your company — you can’t set it up yourself. This generally costs between €500-1,000.
- You have far more records to keep as a BV — expect to pay around €600-1,800 per year.
- Anyone who owns more than 5% of shares then you have a ‘substantial interest’ and become ‘director and major shareholder’. That means you will pay income tax on your salary, and perhaps also Dutch dividend tax. This makes paying yourself a salary from a BV relatively expensive.
- Your BV will also have to pay corporation tax on all of its profits.
- While you’re not generally liable for your company’s debts, it’s likely that you will have to co-sign for loans.
- You can hire employees for a BV, but must pay payroll taxes and social contributions for your employees.
Can’t get enough of cooperating? Consider a general partnership! This company structure lets you start a business with other self-employed individuals. A general partnership has a minimum of two people work together under one common name. Here’s what you need to know:
- Every person entering a general partnership will become a partner and must contribute something. They might contribute money, or goods, or labour.
- There is no legal corporate identity, so partners are personally liable for debts.
- You must register your VOF at the Netherlands Chamber of Commerce (KVK). This costs €50.
- You will draft a partnership agreement stating agreements made about powers, equity, profit sharing etc. You can do this with a civil-law notary, a legal adviser, a lawyer, an accountant — or do it yourself.
- You are legally obliged to keep records.
- General partners will pay income tax on their own share of the profits.
- Your VOF will also pay VAT.
- If all managing partners in your general partnership are from other countries you must file your annual accounts.
- You must pay payroll taxes and social contributions for any employees you hire.
A cooperative is a collection of people who pool their purchasing and marketing efforts. If you’re an individual dealing with an increased workload, fall ill, or need someone to take over, this type of business structure can be useful. You can be either a ‘business cooperative’ or an ‘entrepreneurs cooperative’. Here are the main details:
- A business cooperative helps its members in certain areas, like procurement or advertising.
- An entrepreneurs cooperative is perfect for self-employed individuals who want to join with other self-employed people to take on a larger project.
- You can set up a cooperative with at least one partner.
- Control of a cooperative rests with the ‘general meeting of members (GMM).’
- You need a civil-law notary to draft a deed and register the company in the Dutch Commercial Register.
- If the cooperative is dissolved, all fellow members (unless excluded) are liable for an equal share.
- All members of a cooperative will pay income tax on their profits from the cooperative, and the cooperative must also pay corporation tax.
Other company types in the Netherlands
While the above list is the most common types of Dutch company structures in the Netherlands, it’s never quite that simple — there are quite a few more! Here’s the breakdown, and where to find more information:
- Professional partnership (maatschap)
- Limited partnership (cv or commanditaire vennootschap)
- Public limited company (nv or naamloze vennootschap)
- Association (vereniging)
- Foundation (stichting)
Planning to set up a Dutch company, or done so already? Tell us your experience in the comments below!
Editor’s Note: This article was originally published in July 2020 and was fully updated in January 2020 for your reading pleasure.
Feature Image: www_slon_pics/Pixabay