If you are a foreign entrepreneur who wants to incorporate a Dutch company, then you should already be familiar with the private limited liability company. Not only are the majority of Dutch companies private limited liability companies, but 99% of our clients actually choose to establish this legal entity when incorporating a business in the Netherlands. The BV is a very versatile legal entity that offers the added bonus of limited liability for all directors and shareholders. This means that you cannot be held personally liable for any debts you might create with your company. But there are many more advantages to a Dutch BV, which are often unbeknownst to foreign entrepreneurs. As such, we receive a lot of questions about the Dutch BV. In this article, we answer the most commonly asked questions, so you can learn about all the benefits this company form has to offer.
1.What kind of entity is the Dutch BV?
In almost every country, there are several legal entities you can choose from when you establish a company. A legal entity is the business itself. As it has legal status, it is considered independent and able to enter into contracts, as if it were a person. Hence, it is named an entity. The Dutch BV is basically one of the many legal entities you can choose for your company in the Netherlands. It is also an incorporated entity, which means that it legally exists as such. The Dutch BV is the equivalent of a private company with limited liability, such as the German GmbH and the Ltd. company in the United Kingdom. Therefore, its shareholders are liable (financially) only for their own investments in the business and do not carry personal liability for the company’s debts. This is why, among other reasons, Dutch BVs are preferred by international entrepreneurs.
2.What are some general benefits of the Dutch BV?
The Dutch BV is the most popular legal entity for various reasons, such as the abovementioned limited liability it offers for its directors and shareholders. But that’s not the only advantage, on the contrary, the required minimum share capital is only 1 euro, which is generally divided between 100 shares. This used to be €18.000 in the past, but it changed with the introduction of the Flex-BV in 2012. One massive benefit of the BV is the possibility of establishing a holding structure in which one or more subsidiaries fall under one holding company. You can thus create the perfect company structure according to your preferences, and you also have the option to divide your property and financial risks among several BVs via a holding company structure. Furthermore, selling your company is fiscally attractive. With a private limited company, you can generally sell (part of) the shares at a very favorable price if you own a holding structure. If the holding company owns at least 5% of the shares of the working BV, the participation exemption applies. This tax rule ensures that the sale of shares is tax-free, which means you can invest it all in another company, for example.
The same applies to profits you generate, as there are ways to invest these tax-free as well. Another advantage of the Dutch BV is that you can easily attract investors through the issuance of shares. This provides investors with a certain amount of security, making them more amenable to investing. Additionally, the corporate income tax in the Netherlands is relatively low when compared to other neighboring states. As the owner of a BV, you benefit from this. Business succession with a BV is also easier than with other legal entities. Lastly, you generally make a great impression when owning a BV. Due to the incorporation requirements and strict fiscal regulations, owning a BV exudes professionalism and this will naturally draw customers and potential business partners towards your company.
3.Why form a BV company in the Netherlands?
The Netherlands is considered one of the top countries for business worldwide, which is proved by the country’s top position in many esteemed international business lists. One interesting fact about Holland is its fantastic strategic position. You will find both Schiphol Airport and the port of Rotterdam in the country, which are never more than a 2-hour drive away from your location due to the small size of the Netherlands. This is especially beneficial for companies that participate in import and export activities, such as logistics companies, web shops, wholesale companies and general trade companies. Next to that, the Dutch are very innovative and welcome foreign entrepreneurs with open arms. Diversity is high on the agenda, and the more interesting companies that settle in Holland, the better. The population is almost entirely bilingual, the Dutch are actually the best non-native English speakers in the world. Most Dutch people even know a third language, such as French or German. You will have no issue finding qualified personnel or freelancers to assist you with your business activities. The economic and political climates are generally stable, creating a safe haven for anyone who is serious about doing business internationally.
4.When should one consider forming a BV company in the Netherlands?
There are many imaginable reasons to establish a company overseas. If the current business climate in your own country is unstable, it is a good solution to consider expanding to other nations. The same goes for businesses that aren’t quite achieving the success you hoped for in your native country, whereas the same company might be very successful elsewhere. Also, you might just be looking to expand your company internationally to cover more ground or attain other types of clients and investors. Some countries might offer higher-educated staff, or more specifically, educated employees that specialize in something you need for your business. For all these reasons, the Netherlands is actually a great choice since it offers everything you might look for. Furthermore, the country is a member state of the European Union (EU) and, as such, has direct access to the European Single Market. Being able to freely trade goods and services between so many countries is a huge benefit for almost any type of company. So, if you would like to take your business to the next level, the Netherlands is an absolutely fantastic location to choose.
5.What are the top companies based in the Netherlands?
In 2020, more than 24 thousand multinationals were active in our country, according to the Dutch Central Bureau for Statistics (CBS)1. These include (but are definitely not limited to) well-known companies such as Discovery, Ridley Scott, Panasonic Europe, FUJIFILM Irvine Scientific, Swisscom, Universal Music, IKEA, Lipton, Nike, Adidas, Cisco Systems, Booking.com, Tesla Motors and Netflix; the list is extensive2,3. There are many reasons these companies decide to open a subsidiary or even headquarter here, such as the fantastic infrastructure, highly qualified staff, international opportunities and opportunities for growth and innovation. The Netherlands is globally seen as a very progressive country with a vibrant business climate that attracts many successful businesses. If you choose to open a Dutch BV, you will also be one of these entrepreneurs. This will undoubtedly professionalize your corporate image even further.
6.Can non-residents form a BV company in the Netherlands?
It is entirely possible for non-residents to open a Dutch BV; the Netherlands even welcomes foreign investors and entrepreneurs. The procedure itself depends on your specific preferences, such as the number of companies you would like to open, the number of owners/shareholders, the nature of your company and its activities, where you want to settle, and whether you would also like to immigrate to the Netherlands. In almost all cases, remote incorporation is fully possible, so there is generally no need for you to travel to the Netherlands. If you are able to provide us with all the necessary information and documents, we can arrange the entire process for you from here. Due to the possibility of remote establishment, almost any foreigner can start a Dutch company from their home country. As a side note, it also positively influences international trade and the image of the Netherlands as an inclusive country when many foreigners incorporate a company here.
7.Who is considered to be the owner of a BV, and can someone be both the shareholder and director (as a non-resident)?
The owners of the BV are its shareholders, who have acquired privately registered shares and thus own (part) of the company. There must be a minimum of one shareholder. A shareholder can be either a Dutch or a foreign, physical or legal, entity or natural person. If there is only one shareholder, the shareholder’s details are available to the public via the website of the Dutch Chamber of Commerce. If there are multiple shareholders, only the details of the BV’s directors are listed in the trade register. Please note that the directors of a Dutch BV are not necessarily shareholders, nor are shareholders always directors. This can vary, although the main director (directeur-grootaandeelhouder, or DGA in Dutch) is also always a shareholder. If you establish a Dutch BV by yourself, you will be the DGA and therefore the owner, as well as a shareholder and director.
8.Does a Dutch BV need a director?
Any private limited liability company should have a minimum of one director, although there is not necessarily any need to appoint a secretary. The director’s position can be filled by the single shareholder or by nominated directors. In principle, the director is the official representative of the Dutch BV under all circumstances, unless his/her powers are limited by the provisions of the Articles of Association or Memorandum of Association (AoA/MoA) or supplementary agreements with shareholders and managers. If you are starting a Dutch BV by yourself, you will automatically be the sole director. If there are multiple directors, then the BV has a board of directors, which is mostly referred to as "the board". Keep in mind that every Dutch BV needs to register its main director in the Ultimate Beneficial Owner (UBO) register.
9.What do non-residents need for company formation in the Netherlands?
If you want to establish a Dutch company, you will need to provide some basic documents and information to start the process. The first important necessity is a unique and original company name that resonates with your overall goals and ambitions. You will also need one or more founders of the company, since a company cannot establish itself. These founders need to provide a valid form of identification to start the process. Next to these two basics, there is also a chance you might need permits, depending on the nature of the business you wish to incorporate. If you want to physically move to the Netherlands as an individual, you might also need a permit or visa, this depends on your country of origin. Intercompany Solutions can assist you professionally with all these matters.
10.Do I need a business license in the Netherlands?
There is generally no need for a business license, except in very specific cases. Most types of companies can operate freely in the Netherlands without the need for any licenses or permits. If you would like to know if you need a license, you can check this website and fill in the data that is asked. You will immediately know whether you need a license or permit. In the case that you want to expand or renovate your factory or business premises, or place a facade advertisement, chances are high you will need an environmental permit. The environmental permit has been in existence since October 1, 2010, and replaces a number of permits and exemptions. In the past, you needed multiple permits for, for example, construction, felling, the environment, advertising and use. You apply for the environmental permit via the Online Environment Desk. Sometimes it turns out that your plans do not fit within the zoning plan. With an environmental permit, you can ask the municipality to deviate from the zoning plan. Also note that an establishment permit is no longer required. When deciding whether to grant the permit, the Dutch government checked if the entrepreneur had sufficient professional knowledge. This rule has no longer applied since July 1, 2007. So, you no longer need to apply for an establishment permit4.
11.How much does the formation of a Dutch BV cost?
The total amount you will need to spend depends on several factors, such as the type of business you wish to establish, the amount of people involved, the amount of companies, and other details that influence the costs, such as whether you would like to immigrate to the Netherlands and need a visa or certain permits. The exact costs of incorporation will be calculated according to your specific business needs and goals, but you should consider the following standard fees and costs involved with the procedure:
- Preparing all legal documents and documents for identification purposes
- The fee at the Dutch Chamber of Commerce for registering a Dutch company
- The costs for registration at the local tax authorities
- Our incorporation fees cover the formation of the company as well as extra services such as the application for a Dutch bank account
- Our fees for assisting you with the VAT number and optional EORI number applications
- The annual costs cover our accounting services.
Of course, we will happily provide you with a detailed personal quote for the formation of a Dutch company.
12. Are company formation expenses in the Netherlands tax-deductible?
All costs you incur for a company from a business perspective are deductible. This also includes costs made with the intention of setting up a business, i.e., the money you had to spend before you started the business. These costs can vary enormously, such as the price for a market survey, obtained advice and general costs and fees, such as the notary fee when setting up a Dutch BV. Once you are considered an entrepreneur, you can, under certain conditions, deduct the VAT you have paid as input tax from your sales tax return. It is also possible for you to use the special arrangements for entrepreneurs for income tax purposes with retroactive effect. This means that you should keep all invoices and also keep the correct administration, because that is the only way you will be able to file a VAT tax return. So, to answer the question, yes, the incorporation fees are almost always tax-deductible.
13.How much share capital do I need to deposit?
In October 2012, the government of the Netherlands passed a new act regarding the requirements for the establishment of BVs to stimulate entrepreneurship. The share capital necessary for incorporation was reduced from €18,000 to €0.01 per share, for a total of 100 shares, due to the introduction of the so-called Flex-BV. This means that the Dutch BV has been much more accessible to a wider audience since then, which also explains the large number of new BVs that have been established since that year. Our advice, however, is to start your BV with a minimum share capital of €100 and a nominal share value of €1.00 per share. If you would like to opt for a share value above €1000, please let us know, because in such cases, the procedure for incorporation will be a bit different and possibly slightly longer.
14.Where can non-residents form a BV company in the Netherlands?
Dutch BVs are all obliged to have a registered address in the country itself, meaning that the company needs to be physically present in the Netherlands. The address has to be real and physical, which means that P.O. boxes and other forms of postal addresses are not acceptable. You can rent an office space to achieve this, there are many kinds of office spaces available throughout the Netherlands. Alternatively, you can register your company with a third party that allows you to establish your company using an address they provide. Please do your due diligence in this case and make sure that this third party is trustworthy and offers legally sound services. Without a valid Dutch registration address, company establishment is impossible, so try to find a good location throughout the Netherlands that suits your needs well.
15.What is a holding structure, and what are its benefits?
If you want to establish a Dutch BV, you have several options. You can choose to incorporate a subsidiary, which is basically an operating company. All your daily business activities are carried out by an operating company. If you already own a parent company in your native country, you can link the Dutch subsidiary to your already existing holding company. Alternatively, you can choose to establish an entire holding structure in the Netherlands. You will then have a holding company as well as one or more subsidiaries, depending on your goals and personal preferences. One of the main benefits of a holding structure is risk spreading. You can move your assets around the BVs, for example, when you want a certain amount of profit to be safely stored. In the event that one of your subsidiaries goes bankrupt or when you sell it, you can deposit funds within the holding company, which will then be safe due to limited liability. You can also fund new ventures with money that is stored in the holding under beneficial tax conditions. Next to that, if your holding owns at least 5% of the shares of any given subsidiary, some activities fall under the participation exemption. This allows you to use profits tax-free. Please feel free to contact Intercompany Solutions if you have more in-depth questions regarding the holding structure.
16.What kind of obligations does a BV have towards the Dutch government?
Every Dutch private limited liability company is required by law to submit a yearly report and financial statements to the trade register of the Dutch Chamber of Commerce. Next to that, you will have to file annual and periodic tax returns. These also need to be filed on time if you want to avoid fines. If the company is categorized as a VAT-liable company, it is therefore obligated to submit a VAT declaration quarterly too. If you have employees, you will be responsible for payroll activities. External audits are required when two out of the three following conditions are fulfilled: the BV’s annual turnover is above 12 million euros, its total balance exceeds 6 million euros, and/or it has a minimum of 50 staff members. Please make sure you follow Dutch law, because not doing so might entail serious complications. Furthermore, the limited liability is only valid if there is no improper management. Not meeting these regulations and demands might actually result in improper management, which means that you can be held personally liable for any financial issues or debts you cause. The Dutch government can then obtain funds from your personal accounts; this is not something you want to happen.
17.What should I do to start the procedure for incorporation?
The incorporation of a Dutch BV can only be finalized by a public notary. After all shareholders agree on the incorporation deed, it is then executed before the notary. After incorporation, the company must submit its documents to the Dutch Chamber of Commerce and the Tax Authorities. In order to initiate the incorporation procedure, we need some basic information from you, including the number and details of the shareholders and the main scope of operations of the BV. According to the law in the Netherlands, the deed must be prepared in Dutch. A translated version is also necessary so that the shareholders understand the documents requiring their signature. In case you would like to see an example of standard Articles of Association (AoA), please let us know and we will send you a free sample. The process of incorporation can be finalized within 3 days, but the actual length of the procedure depends on the particular situation, the necessary issuance of a Power of Attorney (PoA) and the fulfillment of all identification requirements.
18.How does the process of incorporation work if I am not a resident of the Netherlands?
In general, the establishment of a Dutch BV by a foreign entrepreneur can be performed remotely, as we already discussed in a precious question. You can send many of the necessary documents via email, only some documents require that you send them via regular mail since they need to be legalized with an apostille by a public notary in your home country. Next to that, public notaries can execute deeds of incorporation through POA; therefore, the shareholder(s) do not have to be present in person. If you submit all documentation rapidly and correctly, the formation process should only take a few business days.
19.How long will the incorporation take?
As stated on our website, the incorporation process generally takes 3–5 business days. There are, of course, some exceptions. If you only want to establish one Dutch BV and you already have all the necessary documents at hand, the procedure can sometimes be finalized in just 1 or 2 business days. On the other hand, if you want to incorporate a more complicated business structure, if there are many different companies and shareholders, or if you also need visas, permits or licenses, you should take into account that the process might take longer. This is also the case when you want to deposit a higher share capital than is required for a Dutch BV. Feel free to contact Intercompany Solutions with any questions you might have regarding the incorporation procedure.
20.Can I freely choose the name of my Dutch BV?
There is one very important last thing you need to know before you start: it is not allowed to incorporate a company with a name already in use by another BV or included in the list of official trade names, such as Coca-Cola and Pepsi (which are very obvious examples). Contact us to check whether the name you like for your company is available at the beginning of the process of incorporation, since this will save you time later on if the name you want is already taken. The name also has to start or end with the abbreviation “BV”. Along with the main company name, you are free to include additional commercial names. This way, you will be able to represent multiple brands with one and the same legal entity, which is very practical.
Intercompany Solutions can incorporate your new Dutch BV company in just a few business days
If you have read all these questions and feel sure about your choice to incorporate a Dutch BV, then it is time for action. Intercompany Solutions has assisted hundreds of foreign entrepreneurs during the past few years with the establishment of a wide variety of business structures. We can start a new Dutch BV for you, incorporate a holding structure, establish a subsidiary that falls under your current foreign holding company, or look for a branch office for you. Please note that a branch office is not a legal entity and thus, does not qualify as a Dutch BV. We strongly advise that you choose to start a subsidiary, as this will provide you with all the necessary means to benefit from all the advantages that a Dutch BV has to offer. A BV will also provide you with direct access to the European Single Market, making it extremely easy for you to trade internationally in an efficient and cost-effective way. If you have any questions, you would still like to ask or would like to receive a personalized quote, feel free to contact us anytime.
Sources:
[1] https://longreads.cbs.nl/nederland-handelsland-2022/buitenlandse-investeringen-en-multinationals/
