How to incorporate a BV in the Netherlands

Below we explain the incorporation procedure of a Dutch B.V. and elaborate on the key issues to be considered when setting up a Dutch B.V.. You will also find an overview of the services we can provide in regard to the setup of a BV, and the annual maintenance of the B.V. once incorporated.

In this publication, we highlight the following topics:

Legal form of a Dutch BV

A "B.V." is a private company with limited liability (LLC). The Dutch term is "Besloten Vennootschap met beperkte aansprakelijkheid". In comparison to other jurisdictions, the BV has features similar to the German "GmbH", the American "LLC", or the English "Ltd".

The B.V. has legal personality and it has an equity divided into shares.

A B.V. can only have registered shares, but these shares are freely transferable; transfer restrictions (like the "blocking clause") are not obligatory, although still possible and allowed.

The shareholders of a B.V. are - in general - not personally liable for acts performed in the name or on behalf of the B.V.  nor can they be obliged to make more funds available than that part of the capital for which they have subscribed.

Statutory directors can be held liable for "acts of bad management" ("onbehoorlijk bestuur"), or the forsaking of certain legal obligations of the B.V. such as applying certain tests before distributing dividends. (Statutory) Directors may also be held liable if the B.V. distributes reserves (dividend) or paid in capital, while the B.V. cannot comply with its financial obligations in the year following the distribution), the timely filing and publication of the B.V. financials statements in the Trade Register, etc.

B.V.s are allowed to denominate their share capital in another currency other than the EURO.

Using special sorts of shares is possible, including shares without voting rights or profit rights.

Substance requirements for a Dutch BV

There are virtually no legal requirements for a BV to have substance in the Netherlands. The only legal requirement is that the B.V. has a Dutch-registered address.

From a tax perspective, it is highly recommendable to comply with the substance requirements that do apply for Dutch tax purposes. These substance requirements include the following requirements: 

• at least 50% of the statutory directors and directors that are authorized to make decisions (i.e. ‘board members’) have to be a resident of the Netherlands;
• these board members must have the necessary professional knowledge to be able to properly fulfill their tasks;
• the company should have qualified staff for the proper execution and registration of transactions to be conducted by the company;
• major board decisions must be taken in the Netherlands;
• the main bank accounts of the company are held in the Netherlands (or are at least managed out of the Netherlands);
• accounting is conducted in the Netherlands;
• the company has accumulated wage costs of at least € 100,000 per annum;
• the company has its own office for at least 24 months with such facilities that the activities of the company can actually be conducted from this office.

The potential dual tax residence issue/ "effective management"

From a tax perspective, it is recommendable to have a majority of Dutch resident directors. This is generally perceived as the minimum substance requirement for Dutch (Holding) B.V's to avoid dual tax residence issues and to qualify for treaty benefits. For operational companies this risk is generally more remote, considering the local presence of the business in the Netherlands.

The primary parameter for determining the tax residence of a B.V. is the official registration as a tax resident. Once the BV is incorporated, it will by virtue of law be considered a Dutch tax resident by the Dutch tax authorities (incorporation principle).

However, when a foreign tax authority can make a case that the “place of effective management” of the B.V. is actually situated in their country, they may try to tax the B.V. as if it were a tax resident of their own country. This is a generally accepted principle of international taxation.

Most tax treaties concluded by the Netherlands provide that in case both treaty countries claim the tax residence of the B.V., it will for the application of the tax treaty be deemed a tax resident of the country where its "effective management" is situated.

The term “effective management” is a technical term, and basically refers to the place from where the key management decisions of a corporation are taken. This is not necessarily the place where the business is run and managed, and it is not necessarily the same place as where the day-to-day (routine) management decisions of the corporation are taken.

An important factor for determining where the place of effective management of a corporation is located is the place of residence of the decision-making director, and in the case of more than one director, the place of residence of the majority of the directors. This is an important parameter although not the most important one: the place of effective management is the place where the actual management is exercised, which does not necessarily have to coincide with place of residence of the director(s).

For every company that operates internationally, senior management can be resident everywhere and travel all over the place. It is then quite inevitable that management decisions have to be taken remotely, by e-mail, telephone, etc. However, in order to avoid dual tax residency issues referred to above, it is import that the center of all the activities with respect to the affairs of the BV is located in the Netherlands.

Other factors relevant factors for determining the effective place of management are:

• country of incorporation
• location registered office
• location personnel
• location physical office
• main bank account
• bookkeeping

As stated above, the B.V can have only foreign-based directors. Ideally (one of the) director(s) would become a Dutch tax resident. If this is not feasible or desired, the "effective place of management" can still be considered to be situated in the Netherlands provided that the foreign director is in the Netherlands on a regular basis to manage the affairs of the BV, and to attend board meetings, shareholders meetings, etc.

Involvement public notary

The incorporation procedure of a BV requires the involvement of a Dutch public notary.

Under normal circumstances the incorporation can be done remotely, so that personal attendance of the directors or shareholders is not required.

We have special arrangements with public notaries for the incorporation of (standard) BVs, based on fixed prices. We have agreed on a variety of “standard” articles of association that provide all standard provisions suitable for acting as an internationally operating company of a certain nature: the articles will always have to be tailored to the activities of the company.

The articles will be (and must be) drafted in the Dutch language, but we will provide a translation into English as well. 

There is no minimum capital requirement for a Dutch BV (as long as there is at e least one share with a par value).

Pre-incorporation period

As soon as the incorporation procedure of the BV is started, it is already possible to do business in the name of the BV. The BV should then however first be registered as a "BV in incorporation", also referred to as "BV i.o.", with the Chamber of Commerce. Until the incorporation procedure is completed, the "BV in incorporation" is considered an extension (branch/partnership) of the incorporator(s).

On incorporation, the company must ratify all the transactions that the incorporator(s) entered into on behalf of the BV i.o. during the pre-incorporation period. The directors/incorporator(s) are in essence personally and jointly liable for acts performed during the pre-incorporation period until ratification by the BV.

Because nowadays the BV can in many cases be incorporated "overnigth", the use of a "BV i.o." has become a rather seldom phenomenon.  

The incorporation procedure of a Dutch BV

The procedure for the incorporation of a BV (step by step) is as follows: 

Step 1: Fee proposal and confirmation fee quote

Based on your specific wishes and requirements, we will prepare and provide you with a fixed fee quote for the turnkey incorporation and deliverance of the BV.

Before we can start up the incorporation process we need confirmation that you agree with our fee quote. This can usually be done by return e-mail, or through the execution of an engagement letter for this purpose.

For KYC clearance, we will need to receive information and documents about party(ies) that we should consider our client. Usually, this is the incorporator of the BV, and if this is a corporation, its UBOs and directors. The information and documents required for the incorporation will cover most of our needs in this respect.

Upon receipt of your approval, we will ask you to pay a retainer fee as an advance for the work to be done by us and the public notary. After receipt of this retainer fee, we will proceed with step 2.

Step 2: Request for required information and documents

We will provide you with a list of information and documents required to start up the incorporation process.

Copy passports and some of the documents requested may have to be legalized (including apostille). The legalization of passports can also be done face-to-face but this then requires a personal visit to our offices or the offices of our public notary. 

Step 3: Provide draft Powers of Attorney and sign off on incorporation documents

After we have processed the required information and documents, we will provide you with the draft articles of incorporation of the BV and the forms and documents which will need to be provided by you for completion of the incorporation process such as a Power of Attorney.

Step 4: Completion of the incorporation

Upon receipt of your approval of the draft articles of association and the signed documents/forms referred to above, the BV can technically be incorporated.

Step 5: Registration with the Chamber of Commerce and the Dutch tax office

The final step of the incorporation process is the registration of the BV with the Chamber of Commerce. After registration with the Chamber of Commerce, the BV is in most cases automatically registered with the tax authorities. The registration for VAT purposes and the registration as employer will generally require a separate registration procedure to be followed. We usually monitor this process and handle it on our client's behalf.   

Identification

We will require legalized copies of the passports of the future directors of the BV, the incorporator(s) (if individuals), and UBOs with a qualifying share interest.

If the incorporator(s) and future director(s) are individuals, the legalization can be done face-to-face at our offices or the office of the public notary.

If the incorporation is to be done remotely, a qualifying third party will need to legalize the documents (typically a foreign notary).   

If the incorporator is a corporation, we will require a Power of Attorney with a legal opinion on the existence of this corporation and the person (director) representing the corporation. A draft of such a legal opinion will be provided by us in the course of the incorporation process.  

Opening bank account

No minimum capital requirement applies for a BV anymore, and hence, the BV does from a legal perspective no longer require a (Dutch) bank account at incorporation. Also not afterward, but it would in practice be very difficult, if not virtually impossible, to operate a BV without a bank account.

The bank account does not necessarily need to be a Dutch bank account, but a foreign bank account may complicate the daily operations of the BV.

During the last couple of years, the Dutch banks have become more stringent about the procedure for opening a Dutch bank account. It is in any case required that the director(s) visit the bank in person, identify themselves, and fill out the necessary forms. Furthermore, the banks tend to be quite critical towards foreign owned and managed BVs, the BV's business model, its actual presence/ substance in the Netherlands and the actualy necessity for having a Dutch bank account.

We have close contacts with the major international banks in the Netherlands (like ING, ABN-AMRO, Rabobank, and Deutsche Bank) and we can coordinate this procedure for you. Alternatively, we can make introductions and give referrals to FinTech Companies that generally have more professional and effective compliance procedures in place.

The time frame for the incorporation of a Dutch BV

The incorporation procedure for a Dutch BV can normally be completed in a couple of days.

For the entire procedure in an international context, including the gathering of necessary information and documentation, in our experience, you should consider a period of one to two weeks. We emphasize that an accelerated procedure is possible.

Registration of the BV in the Trade Register

Upon incorporation, the BV will be registered in the Trade Register of the Chamber of Commerce.

The Chamber of Commerce keeps the Trade Register which contains information about all Dutch BVs (and other business entities) incorporated and/or registered in the Netherlands, like statutory name, date of incorporation, registered address, name, and authority of directors.

It is noted that the name of 100% shareholders is included in the publicly accessible part of the Trade Register.

In day-to-day business, the Trade Register is an important source of information for possible business partners and it is common practice in the Netherlands that the Trade Register is consulted before doing business.

Registration of the Ultimate Beneficial Owners of the BV

The identity of ultimate beneficial owners who directly or indirectly own 25% or more of the company will have to be included in the so-called "UBO-register". Until 22 November 2022, the information in the Trade Register was freely accessible to the public.

Based on the fourth EU Anti-money Laundering Directive, the UBO-register is in force as of September 27, 2020. The Dutch UBO register contains information about UBOs holding a direct or indirect interest of 25% or more in a Dutch BV (or other qualifying Dutch entities). Only part of this information was accessible by the public. 

As of 22 November 2022, data from the UBO Register is no longer available to the public, and it is no longer possible to obtain an extract from the UBO Register by the public. This is based on a ruling by the Court of Justice of the European Union, which considered the public accessibility of the UBO Register an infringement of European privacy laws.   

Registration with tax authorities

The BV needs to be registered with the Dutch tax authorities and also with the social insurance office if any employees are to be hired by the BV or assigned within the group to the BV.

The tax registration of the BV will in essence be done automatically with the first registration of the BV with the Chamber of Commerce. For obtaining the VAT number and for registration as an employer a separate request for registration is required.

We can monitor the registration process for you to ensure proper and timely registration.

Administration and filing requirements of a Dutch BV

In essence, every Dutch BV has the ongoing obligation to keep and maintain an administration, to register for tax purposes, and to file periodical tax returns.

The administration forms the basis for the preparation of the annual financial statements according to Dutch GAAP. The annual financial statements can also be based on IFRS, but then generally a statutory audit becomes obligatory. 

After the end of the year, the General Meeting of Shareholders should approve the Financial Statements as presented by the board of directors and provide discharge to the board of directors of any liability in this respect.

An abbreviated version of the Financial Statements must be filed with the Dutch Chamber of Commerce for publication in the Trade Register. The Trade Register is accessible to the public.

It depends on the nature of the activities of the BV for which taxes the BV must be registered and which periodical tax returns need to be filed. Most BVs are subject to Dutch corporate income tax and VAT and, if they have employees, Dutch wage tax.

We offer a full compliance package for Dutch BVs, including:

• administration
• corporate secretarial
• payroll and employer's assistance
• VAT services and compliance
• corporate income tax compliance

For more information please consult our concrete service offer in this respect.

Cost of incorporation

The cost of incorporation of a BV depends on various parameters such as the volume and nature of the shares, number of incorporators/ directors, required special provisions in the articles, etc.

The cost of incorporating a standard BV in an international context is about € 1,150 to € 1,500 (VAT excluded), which includes English translations of the articles of incorporation.

Our fees for setting up advice, co-ordination, etc. will depend on time spent. If no special circumstances occur they usually vary between € 500 and € 1,500 (excl. VAT) per incorporation.

We have trusted relationships with various public notaries. We only work with parties who have experience with international business practice and have proven to deliver value for money. We can refer you to suitable parties or coordinate the incorporation process on your behalf.

What can we do for you?

We are engaged daily by non-residents (corporations and individuals) who want to incorporate a Dutch BV.

It usually starts with an inventory of the plans for the BV, confirmation of appropriate legal form, potential tax consequences, and the ongoing corporate secretarial, accounting, payroll, and (tax) compliance requirements. Once the decision to set up the BV has been taken, we can execute and arrange for the incorporation on your behalf.

To the extent required, we can coordinate the input of other parties involved (like banks, lawyers, etc.) and make sure that the incorporation process goes smoothly and efficient.

Once the BV has been set up we can monitor the tax registration and handle the administration, payroll, and ongoing accounting and tax compliance matters.

The services we provide include:

• Advice on corporate law and tax issues linked to the incorporation
• Advice on the appropriate legal form
• Coordinate the incorporation procedure
• Advice on the tax efficiency of the structure
• Negotiation of an advance tax ruling
• Deal with registration requirements
• Employer's assistance and payroll services
• Accounting and tax compliance
• Ongoing support on administrative, legal, and tax matters

We are gladly prepared to coordinate and to assist you with the incorporation process of your BV and handle the associated registration and filing requirements.

If you wish to receive more information, please feel free to contact us via e-mail or call us at our office in Amsterdam at +31 (0)20 5709440 or our office in Rotterdam at +31 (0)10 2010466 for more information.