A GUIDE TO CREATING A PRIVATE COMPANY IN THE NETHERLANDS Are you considering doing business in the Netherlands? Setting up a company in the Netherlands is easy. This flyer gives some basic guidance on which steps to take and which rules apply. If you have any further questions after reading this information, please contact us. We will be happy to guide you further.

The first steps Shares The most common legal entity in the Netherlands is The BV has a (share) capital divided into one or more the private company with limited liability (in Dutch: shares. The incorporation of the BV does not require besloten vennootschap met beperkte a minimum share capital; therefore the minimum aansprakelijkheid, or ‘BV’). capital could be EUR 0.01. Furthermore, it is not required to pay-up the share capital of the BV at the A BV – an independent carrier of rights and time of incorporation. It can also be paid-up later obligations - is established by a notarial deed, upon request of the BV. As long as it is not paid-up, executed before a Dutch civil law notary, and can be the obligation to pay up these shares in principle incorporated by one or more incorporators/ remains. shareholders. Both natural persons and legal entities can be incorporators/shareholders in a BV. Foreign The rights attached to the shares, such as voting natural persons and legal entities can also be rights and profit rights, can be excluded or limited, incorporator/shareholder. albeit that a share cannot be excluded from both the voting rights and profit rights. The liability for The name of a BV must contain the word ‘B.V.’ and shareholder(s) in a BV is limited to the funds invested must be registered with the Dutch trade register of the by the shareholder(s). Chamber of Commerce. The corporate seat of the BV must be located in the Netherlands. The BV is mostly The transfer of shares in a BV is in principle free and used as a legal entity to conduct business and, in not restricted, however it is common to include a so case there are multiple shareholders, to share in the called blocking provision (blokkeringsregeling) in the capital of the BV with the purpose of making profits. articles of association . This can either be the Additionally a BV is often used as a holding vehicle. obligation to acquire the prior approval of the general meeting (approval procedure; goedkeuringsregeling) The objectives of a BV can actually include anything, or the obligation to first offer the shares to the other as far as the objectives are not contrary with the shareholders (offer procedure; aanbiedingsregeling). public order and/or morality. Profits can be realized Like the establishment of a BV, the transfer of shares with the objectives of the BV by conducting business, in a BV requires a notarial deed of transfer, executed such as the entering into agreements, contracts, before a Dutch civil law notary. partnerships, joint ventures, etc.

A guide to creating a private company in the Netherlands The board Profits The board represents the BV and is appointed by the In a BV, the profits of the company are at the disposal general meeting. The board shall consist of at least of the shareholders. The BV may make distributions one director who can either be a natural person or a to the shareholders and other persons entitled to legal entity. Also foreign persons and/or legal entities distributable profits only to the extent that its equity can be appointed as director. At the shareholders’ exceeds the reserves which must be maintained discretion, the BV may also have a supervising body, under the law or the articles of association of the BV. in which case the BV may have either a one-tier or a two-tier board. Before the profits can be distributed to the shareholder(s), the board has to perform a ‘balance In case of a one-tier board, the board of directors test’ (balanstest) and a ‘distribution test’ consists of executive (uitvoerende) directors and non- (uitkeringstest). The board should refrain from giving executive (niet-uitvoerende) directors. The executive its consent to a distribution if the board knows or directors carry out the daily business of the BV and could reasonably foresee that as a result of the the non-executive directors control the executive distribution the BV will not be able to continue to pay directors. The non-executive directors always have to its due and payable debts. In this perspective it be natural persons. In case of a two-tier board, a should also be noted that the board of the BV can be supervisory board is installed and this supervisory held liable (jointly and severally) in case the BV will board controls the board of directors. The members not be able to continue to pay its due and payable of the supervisory board always have to be natural debts. persons.

A guide to creating a private company in the Netherlands Tax Both at the incorporation of a BV and during its Key contacts existence, Dutch tax treatment should be carefully monitored. For instance, tax residency may be Steven van der Waal Partner - Civil Law Notary determined by the place of effective management and [email protected] control. Dividend distributions may lead to Dutch T +31 (0)70 318 4295 dividend withholding tax. For each Dutch BV in principle a Dutch corporate income tax return should Peter van Dijk be filed each year. The BV may also be an Partner - Corporate/Tax entrepreneur for Dutch VAT purposes. [email protected] T +31 (0)70 318 4834

Should you want any more information about Casper Ooijevaar incorporating and operating a Dutch BV, please don’t Associate - Civil Law Notary hesitate to contact us. [email protected] T +31 (0)70 318 4207 burenlegal.com

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