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The Netherlands is located in Western Europe and is commonly known as Holland. It is a country where businesses can be set up quickly. The treaties and bilateral agreements with the other member states act as an advantage that provides an edge over its competitors in the market to the company registered in this country.
The country’s favourable business location and well-developed infrastructure make it an attractive destination for companies worldwide. These types of company range from Private Limited liability companies (BV) to sole proprietorships and subsidiaries. It is essential for business owners to understand the differences between the company types and to choose which is suitable for their needs. However, in that way, they can optimise their operation, protect themselves from financial and legal risks and maximise their growth in their business.
Here we can discuss the different types of companies in the Netherlands and their eligibility, including other relevant factors.
Eligibility Criteria for Netherland Company Registration
The following qualifying requirements must be met to register a company in the Netherlands:
Types of Companies in the Netherlands
The Netherlands has several types of company structures. Hence, the owners must thoroughly research the different business structures in this country and opt for the most suitable structure per their business requirements. To incorporate a business in the Netherlands is a straightforward process, and each type of company is regulated by Dutch law. The following types of business structures can be utilised for company registration in the Netherlands:
Business owners have multiple options to start a business in the Netherlands. They can transfer their business to the country or open a branch office. They can also register their business as an innovative startup or part-time business. Some may go for only a representative office, which is not legally defined or regulated, hence not listed in the Business Register of the Chamber of Commerce (KVK).
There exist three legal types of company structure options for foreign investors looking to set up a company in the Netherlands:
The Dutch law distinguishes corporate entities in the following manner:
According to the recently modified Company Law, to start a business, you can register a Dutch BV (Private limited liability company) that requires at least one shareholder and can have a maximum of 50 shareholders with a minimum share capital of 1 EUR. There are several requirements for the board of directors and the local company headquarters, both of which are required for “substance,” as defined by State Laws. The BV is subject to corporate income tax. You need to hire the services of a civil/law notary to register your company and maintain financial records per the prevailing laws.
The NV is also known as a public limited liability company and is often used in larger companies. It requires at least one director, and shareholders are not limited. NVs that trade on the stock market must adhere to the Dutch corporate Governance code. The NV needs to be registered in the Dutch Commercial Register. A share capital of EUR 45,000 is required for the public liability company in the Netherlands, which is suitable for substantial investments. The general meeting of shareholders makes management decisions; the board will make daily decisions for managers.
The Coöperatie is a company owned and governed by its members, who share in the profit and decision-making of the business. It is often used for businesses that require collaboration between members. The Coöperatie is subject to corporate income tax, and each member is responsible for their share of the tax liability. It must be registered in the Dutch Commercial Register via a deed drafted by a civil-law notary.
Each legal entity has definite characteristics and is governed by a specific set of rules. For example, BV and NV types of companies differ in their incorporation, composition, shares, supervisory board, etc. One can incorporate a BV with zero paid-up capital, whereas an NV requires EUR 45,000 as starting capital by the shareholders. You also get more flexibility in drawing up the articles of association of a BV. As for a Dutch cooperative, you can establish it with two members (instead of shareholders) and register it with the trade register of the KVK.
2. Non-corporate Entities
Non-corporate entities can be either of the two:
The general partnership is for businesses with two or more partners united under the same name, share the same economic goals, and have unlimited liability for the company’s obligations. They share the earnings and are not required to have a minimum share capital, as with Dutch BV. If the company finances are insufficient to cover the debts, creditors can seize the personal assets of each general member of the partnership. Each partner is liable for their ownership percentage. The VOF is subject to income tax, and each partner must file their tax return. The partnership is not a legal entity. Therefore, partners are liable for the partnership’s debts. VAT is liable to be paid.
The CV is a limited partnership, where there are two types of partners: general partners who are personally liable for the debts, obligations of the business and limited partners who are only liable for the amount they have invested. This company is often used for businesses with one or more passive investors. It has at least two partners and a limited partner. The general partners manage the business and while the limited partners contribute capital gain but have no decision-making power. Furthermore, It is not a legal entity but needs to be listed in Commercial Register and handled by the Chamber of Commerce.
Both forms have two or more partners, individuals or legal entities. There are limited legal requirements to enter into a partnership. A partnership agreement is sufficient for partners (van Noten).
3. Subsidiary or Branch Office
As per Dutch company law, if you are a non-resident not established in the Netherlands. Suppose you already have a business and wish to start in the Netherlands. In that case, you can set up a subsidiary company or branch. A subsidiary company of a foreign entity is similar to a local Dutch company with an independent structure. Therefore, the branch need not be registered as a separate legal entity but has to be registered with the Business Register at KVK and the Dutch Tax Administration.
On the other hand, establishing a branch of a foreign legal entity in the Netherlands does not require prior government approval, only registration with the trade register of the KVK. The Dutch branch thus opened is not separate from the foreign legal entity, and therefore, the rules and regulations of the foreign legal entity apply to it. There’s no obligation to change the foreign business structure – your parent firm’s structure would function here.
Depending on the nature and scope of business activities, the branch may qualify as a ‘permanent establishment’ for taxation matters.
Before choosing a type of company in the Netherlands, create a clear business plan and an outline of your needs to weigh your legal and tax options. Familiarise yourself with the requirements of business name registration in the Netherlands, the cost of incorporation of a company, the process of offshore company registration in the Netherlands, and so on.
The Netherlands and one of the founding members of the EU, is regarded as an excellent location for starting a business. Over the years and the country has established itself, has presented a strong reputation in the world of trade and commerce. The Dutch Gov. provides a favourable business environment and great infrastructure, making it an excellent business operation destination. The well-educated, skilled population of the Netherlands provides businesses with a desirable labour pool. Additionally, it has a secure corporate environment as the country ranks among the top ten countries with the lowest levels of corruption worldwide. By choosing suitable types of companies, owners can ensure optimal operation, mitigate financial risks, and maximise profitability.
Read our Article: Who can be a member of the Cayman Islands Company
Minakshi Bindhani has completed LL.M. with a specialization in Criminal Law from Madhusudan Law University, Cuttack, Odisha. She is more inclined toward legal research and writing and have prior experience in Civil and Criminal litigation and content writing.
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