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Are you planning to start a business in The Netherlands? This article will inform you on the different types of Dutch legal entities. We are currently also developing a ‘Entity Tool’ which will provide you advise, based on your situation and input.
A legal entity (also called: ‘person’ or ‘body’ ) is a business form through which an organization can have rights and obligations. The legal person is an organization, a company, that can independently participate in legal transactions. This allows a legal person to buy things and conclude agreements. You distinguish a legal person and a natural person in law.
You can do business in the Netherlands without registering as a legal identity if you register as a Sole Proprietor.
Whether you intend to do business as a solo entrepreneur or form a public or private company you should be familiar with the different types of business legal entities that can be formed in the Netherlands. While the different options available may seem overwhelming at first you will quickly be able to decide which legal entity type best suits your business. You can find information on every aspect of company formation in the Netherlands as well post questions by subscribing to House of Companies extensive database of up-to-date resources on legal entities.
The type of legal entity you choose to do business as in the Netherlands depends on factors such as the size and type of business you are in, whether you intend to offer public shares on the stock market, the number of partners and directors your business comprises, tax considerations and related issues. The good news is that with the right information you should quickly be able to figure out which type of legal entity works best for your business. The actual process of registering your company in the Netherlands entails a small fee and can usually be completed in 1-2 days.
A legal entity provides a corporate veil, thereby protecting the shareholders (and directors) of any responsibilities of the company. In case case bankruptcy, or other claims towards the legal entity, the shareholders and directors can’t be held liable (in normal circumstances). (See also our article on Liabilities for Directors).
The legal persons are: association, foundation, public limited company (NV) and private limited company (BV).
The internal rules that the organization must adhere to are contained in the articles of association. You can request these articles of association from the Chamber of Commerce.
You can only establish a Dutch legal person at the notary. There are also foreign legal entities such as the Ltd. You must establish this in the country whose law you want to apply. You can also run a company as a self-employed person or in a VOF, you do not need a notary for that.
Once you have decided on the type of legal entity you would like to incorporate as you the rest is relatively simple. Netherlands corporate law is very much geared towards the formation of new companies both local and foreign.
Limited Liability Legal Entities
Private Limited Company (BV)
This is the most popular type of Dutch legal entity for foreign companies seeking to do business in the Netherlands. You will require 0.01 EUR of share capital as well as adhering to basic regulations regarding your company’s Board of Directors and headquarters. You are not required to have a local Director or shareholders and your company may be completely foreign-owned.
The Dutch BV is one of the easiest types of legal entity to register as in the Netherlands because there are no capital or transaction restrictions to getting set up. You can find more information and post questions about the Dutch Private Limited Company legal entity by logging into your Dashboard.
Public Limited Company (NV)
As you may have guessed this type of legal entity in the Netherlands is for businesses who intend to trade company shares on the stock market. If you intend to “go public” the main requirements for registering as a Dutch NV is 45,000 EUR of startup capital. You do not require a local director or shareholder to form this type of legal entity in Holland
Like a Dutch BV, a Public Limited Company is owned by shareholders but shares can be traded by the public. You are allowed to issue a variety of share classes and your public shareholders are not liable for any losses your company may occur.
You can access a host of additional articles pertaining to the Dutch NV as well as post any questions you have.
Partnership Legal Entities
General Partnership (VOF)
If your business consists of two or more partners then the legal business entity you may want to set up in the Netherlands is a Dutch VOF. This type of company structure is usually not suitable if you are interested in engaging in international business activities. That being said, a General Partnership may be ideal for a local joint venture or partnership or investing in assets in Holland.
You do not need to have a local partner or director if you are interested in registering your company as this type of legal entity in the Netherlands. As well, there are no requirements for minimum share capital. You can find additional resources and information to help you register as a Dutch General Partnership via your ShelfCo dashboard.
Limited Partnership (CV)
This legal entity differentiates between managing partners and silent partners in your business. The former manage your company’s business operations in the Netherlands while the latter are usually investors with little say in how you run your company. Managing partners have unlimited liability while silent partners have limited liability under Dutch corporate law.
While it is not necessary, it is a good idea to draw up a detailed Partnership Agreement when forming this type of company. This document will outline roles and responsibilities of the various partners who comprise this legal entity as well as the terms of the partnership. Further guidance on setting up a Dutch CV is available in ShelfCo’s library of company formation resources.
Professional Partnership
This type of legal entity is for professional partnerships such as accountants, lawyers and architects who are looking to register as a company in the Netherlands. A Professional Partnership does not operate as a regular business in that each partner is treated as an independent entrepreneur under Dutch corporate law
A Professional Partnership in the Netherlands can hire staff and is governed by other provisions under the umbrella partnership. This type of legal entity does not require any startup capital and as independent practitioners each partner retains and services their own customers. Visit your ShelfCo dashboard for additional guidance on Professional Partnerships in the Netherlands
Other Legal Entities
Branch Registration
If your company is based overseas and you are simply looking to open an office in the Netherlands then a Branch Registration may be the right type of legal entity for your business. Registering your company as a local branch means that your business will not be governed by Dutch corporate law but will fall under the jurisdiction where your company is headquartered.
A branch does not require startup capital or any local partners or directors. You are also not required to prepare financial statements for this type of legal entity. An alternative to registering your company as a branch in Holland is forming a Limited Private Company as a local subsidiary. You can explore the difference between these options in your ShelfCo dashboard.
Foundations
If you want to start a charity, NGO or nonprofit in the Netherlands then this type of legal entity may be the right choice for you. Foundations offer anonymity to their owners under Dutch corporate law and may also be used for re-invoicing, asset protection or as a legal holding company. A Dutch Foundation offers limited liability and is devoid of shares or shareholders.
A business registered this way in the Netherlands is similar to a foreign “trust” but for the fact that a Foundation is a legal entity governed by Dutch corporate. Setting up a Foundation is a relatively simple process that should not take you more than 1-2 days. You can find additional instructions, guidance and resources in our database via your ShelfCo dashboard.
Associations
This the legal entity to choose if you are looking to promote a cause in the Netherlands. While registering as a Dutch Association does not preclude you from engaging in commercial activities, any proceeds of your enterprise must be used to promote your cause. As an Association you are not allowed to distribute profits to your members.
Associations require two or more members and like most Dutch legal entities they are very easy to start. You are not entitled to tax-free donations and must abide by other Association regulations which you can find out more about in your ShelfCo dashboard. If you have questions about registering an Association in the Netherlands you can post questions to our community.
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Which Type Of Legal Entity is Right For You?
By now you should have a good idea of the type of legal entity you wish you register for in the Netherlands. If you are a solo entrepreneur then you are not required to register as a legal entity in order to do business in Holland. Organizations such as causes, nonprofits and professional partnerships are also clearly delineated by Dutch corporate law and definitive legal entities.
If you are interested in forming a Dutch partnership or unsure of what kind of Limited Liability Company is right for you then you will find all of the resources you need to guide your research and register correctly by subscribing to the ShelfCo resource database. There you will find plentiful information, advice and resources to help you form the right Dutch company structure.
There are many advantages to doing business in Holland and Dutch legal entities are incredibly simple to set up once you have all of the right information. Dutch corporate law encourages local and foreign entrepreneurship and Holland boasts some of the lowest corporate tax rates in Europe. Once you are set up you will have access to a vast market and the infrastructure to help you grow your business exponentially.
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