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The most common legal forms used for doing business in the Netherlands.

After deciding to start business activities in the Netherlands, the next step is to choose the best legal form for the business. Starting a business in the Netherlands is possible through a branch, contractual entity (like a partnership), or a corporation (LLC).

We elaborate on the most used legal forms for setting up a business in the Netherlands and the parameters relevant to making an informed choice. 

Dutch or foreign legal form

Dutch law provides a variety of legal forms for doing business in the Netherlands. The best legal form for the venture will depend on the parameters and the specific demands of your business.

Using a foreign legal form for your Dutch business is possible. The choice is between a foreign corporation with a registered office and tax residence in the Netherlands. A foreign corporation with a branch or representative office in the Netherlands is chosen the most.  For guidance on the choice between a corporation or a branch, we refer to the page "Corporation or Branch".

The most common legal forms in the Netherlands.  

Dutch corporate law provides a variety of legal forms for conducting business in the Netherlands. 

For an overview of the main attributes of the most commonly used legal forms in the Netherlands, please consult "Characteristics ............................." 

Below is an elaboration on the main features of the most used legal forms in the Netherlands. 

Private limited liability companies ("besloten vennootschap met beperkte aansprakelijkheid" or just "BV")

The Dutch BV (private limited liability company) is used the most by domestic entrepreneurs and foreign investors (for example, to carry out a business, for direct investments, or as a holding, IP, or Finance company).

The legal form of a BV is comparable to the UK Ltd, the German GmbH, or the French SARL.  

The Dutch BV has a juridical personality with the main benefit that shareholders are not personally liable for legal acts of the B.V. The BV is easy to incorporate and has no minimum capital requirement.

To incorporate a BV, a notarial deed has to be executed in the presence of a Dutch civil-law notary.  Subsequently, the BV must be registered with the Chamber of Commerce (Trade Register). If not done properly, the directors of the company can be held personally liable.

For more information on the incorporation procedure for a BV, we refer to the page How to incorporate a BV in the Netherlands. 

Public limited liability company ("naamloze vennootschap" or just "NV")

The public version of the Dutch BV is an NV (a public limited liability company). This is the obligatory legal form for stock-listed companies but can be used for non-listed companies.  Nowadays, this hardly occurs because the corporate regime applicable to NV's is generally more complicated. This makes the NV more difficult and more expensive to incorporate and maintain. 

In an international context, the legal form of an NV can be compared to the UK PLC, the German AG, or the French SA.  

The legal regime governing the NV is very similar to the legal regime governing the BV but also has distinct differences. Like a BV, an NV has a legal personality with limited liability to the shareholders. The incorporation requires a notarial deed to be executed in the presence of a Dutch civil-law notary and should subsequently be registered with the Chamber of Commerce (Trade Register). 

Distinct differences are found in the minimal capital requirement that applies to NVs (the NV requires a minimum capital of € 45,000), and the fact that the NV can issue bearer shares alongside registered shares. Whereas a BV, by its nature as a "private" company, can only have registered shares.

In the past, the possibility of issuing bearer shares made the legal form of an NV popular with structures that prioritized the protection of the privacy of the shareholders and the UBOs. Nowadays, this is no longer the case since the introduction of extensive Know Your Client compliance rules (which pulled the use of the bearer shares into a high-risk environment for compliance purposes), and the introduction of the UBO register (which created the obligation for Dutch corporations, including BV's and NV's, to publish the identity of their 25%+ ultimate beneficial owners or pseudo - UBOs if such UBOs do not exist). The legal form of an NV is seldom used outside the scope of a listing.       

Cooperative (in Dutch "coöperatieve vereniging met uitgesloten aansprakelijkheid" or just "coöperatie U.A.")

A cooperative is a society with members, instead of shareholders, but for the rest, it can be set up in such a way that its legal and statutory regime closely resembles the regime of a BV.  

Like with a BV, a cooperative can only be established by notarial deed, has no minimum capital, provides for limited liability of the members (with the addition "U.A."), and needs to be registered with the Chamber of Commerce. 

A distinct difference with a BV is that a cooperative must have two members at incorporation, whereas a BV only requires one incorporator.

Although the origin of the cooperative lies in the agricultural sector, where it provided a tool for structuring the cooperation of farmers (for instance about the joint/central acquisition of equipment and supplies, and the sales of their crops), the legal form of cooperative has also become a very popular legal form for international holding companies. This was mainly caused by the fact that a cooperative by its nature (no shareholders) not subject to Dutch dividend withholding tax. The Dutch government reluctantly temporarily allowed this to happen, but when the cooperative was becoming a generally applied tool to avoid the levy of Dutch dividend withholding tax in an international context, it was decided to end the general exemption from the Dutch dividend withholding tax, preserving this only for structures that were operationally driven.       

As of 1 January 2012, the Dutch cooperative has become subject to a 15% dividend withholding tax to the extent that (i) there is an 'abuse structure' and (ii) the interest in the cooperative cannot be allocated to an active business of the member ('active enterprise test').

The law qualifies a structure as an 'abuse structure' if a Dutch cooperative directly or indirectly holds shares in a company with the main purpose of avoiding Dutch dividend withholding tax or foreign tax. About the "active enterprise test," we note that this is the same test as in the corporate income tax about non-resident substantial corporate shareholders of a Dutch corporation.

As of January 2018, the Dividend Withholding Tax Act has been amended by introducing a dividend withholding tax for so-called 'holding cooperatives.' At the same time, a general dividend withholding tax exemption has been introduced for qualifying corporate shareholders with an active enterprise residing either in an EU/EEA Member State or a jurisdiction the Netherlands concluded a tax treaty with. The condition is that the corporate shareholders have an interest of 5% or more in the Dutch distributing entity, and it holds the shares in the context of an active enterprise ("enterprise test").

Under the current regime, "holding cooperatives" will be required to withhold dividend tax if one or more members are entitled to at least 5% of the profit and/or liquidation proceeds. A holding cooperative would be defined as a cooperative when at least 70% of the activities comprise holding of participations or direct or indirect financing of affiliated entities. An exemption to this rule applies for holding cooperatives that have a linking function and sufficient activities, also referred to as 'substance', such as an own office with qualified employees that are engaged in managing the participations and financing.

Distributions by a Holding Cooperative will nevertheless be exempt if the new general dividend withholding tax exemption applies or if an exemption applies under a tax treaty between the Netherlands and the shareholder’s country of residence. As such, whether or not a cooperative is subject to Dutch dividend withholding tax should be verified by a tax advisor. If you have any questions about the tax consequences of cooperatives, we are happy to assist you further.

For more information about the legal and tax regime governing a cooperative, and the procedure to incorporate a cooperative, we refer to the page Incorporation of a Dutch Cooperative Society.

Societas Europaea (or just "SE")

The so-called European company, better known as "Societas Europaea" or "SE" (a Pan-European legal form that can be incorporated within the EU) can also be used as a legal form for your business.

There are three ways to incorporate a SE:

  • through a legal merger between two companies located in different EU Member States;
  • through incorporation;
  • through a change of the legal form (convert for instance an NV into a SE).

The features of the European cooperative Company (SCE) are comparable to the SE, in Dutch law the SCE is made equal to the SE. However, certain regulations that specifically apply to Dutch cooperatives can also apply to SCEs.

Partnerships (general partnership, or "VOF", limited partnership, or "CV")

Dutch law distinguishes two types of partnerships, either the general partnership (VOF) or the limited partnership (CV). All of them do not have legal personality but can have an equity divided from the partners.   

A partnership can be formed by two or more partners that may be either individuals or legal entities (like for instance a BV).

The partnership should be registered at the Chamber of Commerce (Trade Register).

The partners in a general partnership are jointly and severally liable for all obligations of the partnership.  A limited partnership has two types of partners, e.g. the limited liability partner (also a 'silent' partner, which has the same features as a shareholder of a BV) and the general partner. The limited liability partner is liable only up to its capital contribution in the CV.

From a corporate tax perspective, a partnership is considered a tax-transparent entity; the partnership itself is not subject to corporate income tax, but instead, the partners in the partnership must include their share in the partnership's income on their taxable basis as if they earned it directly. The same inter alia applies to limited partnerships if certain restrictions apply to the transfer of its "shares" and the entry of new partners, the so-called "Closed CV". Only in case such restrictions do not apply, for a so-called "Open CV", the partnership itself becomes subject to Dutch corporate income tax for the share(s) of the limited partners.          

Foreign legal forms in the Netherlands

It is generally possible to use a foreign legal form for a Dutch Business. 

Companies created under foreign law are in general (certain government-linked lines of business excepted) free to operate in the Netherlands, can be a party to a contract, can participate in partnerships, can conclude a joint venture, or establish a legal entity, etc. 

The foreign corporation may be manifesting itself in the Netherlands as a foreign corporation with a registered office and tax residence, but in most cases, it will concern a foreign corporation having a branch or representative office in the Netherlands. For guidance about your decision to choose either a corporation or a branch, we refer to the page "Corporation or Branch".

For more information about the procedure to establish a branch, we refer to the pages How to establish a Branch in the Netherlands, and How to establish a Representative Office in the Netherlands respectively.