If you decide to expand your business to the Netherlands or even start an entirely new business, there are many legal entities you can choose from. Most entrepreneurs choose the Dutch BV, since this business type by far outweighs many other legal entities in terms of financial and fiscal benefits. But some business activities are better suited with a more specialized legal entity, that tailors certain specifics uniquely to the business ideology and goals. A foundation, which is named ‘stichting’ in Dutch, is often your best option if you want to start an endeavor with a more idealistic goal. We will provide you with more information about this legal entity in this article.
What is a Dutch foundation company exactly?
A foundation is a type of Dutch legal form with its own legal personality. The main purpose of a foundation is to strive towards achieving a social endeavor or idealistic goal. This inevitably means, that a foundation should not aspire to generate profit. If any profit is made, it should be allocated to achieve the purpose for which the foundation was established. Foundations do not have to pay taxes unless they operate as a business. In this case a corporation tax has to be paid. Additionally, foundations that have more turnover than six million euros, for a duration of two years consecutively, have to file their annual accounts.
More information on the foundation company
Every foundation must at least have a board of directors, similar to the Dutch BV. A supervisory board which monitors the board of directors may be appointed within the statutes. A foundation does not have any members and is thus not required to hold a members meeting to make important decisions. Since foundations are a legal entity, the board of directors is usually not personally liable. This is also comparable to the Dutch BV. The exceptions to this are:
- When a foundation is not yet registered with the Dutch Chamber of Commerce
- When a foundation is not established through an official notary and the deed isn’t deposited at the Chamber of Commerce
- In case of mismanagement
- When a foundation is unable to pay their taxes and fails to report this to the Dutch Tax Authorities within two weeks
All board members of the foundation have signing authority. Specific rules may be established in the statutes, but only as long as these are amended by an official notary. Furthermore, others may also be granted singing authority through the power of attorney. Foundations may hire staff and are obligated to pay taxes and social security contributions for its staff. In case a foundation is to hire staff, they must also register as an employer with the Dutch tax authorities. Board members may be on the payroll of a foundation, except if the foundation has an ANBI status. We will explain this in more detail later.
Next to that, on the 27th of September 2020 a new law regarding foundations will go into effect. This rule will require anyone within the foundation deemed as: “ultimate beneficial owner(s)” or UBO, to be included in a so called UBO register. UBO’s are persons within the foundation that own more than 25% of the shares and voting rights, or who have the final say when taking company decisions. This act is a measure against fraud in an ongoing government effort regarding the Prevention of Money Laundering and Terrorism Financing Act, also known as the Wwft.
How to establish an NGO in the Netherlands?
A foundation may be started alone, with others and also with other legal entities. A foundation may even be started in your name, by someone else after your death (as long as this is clearly stated in your will). A foundation must be started by drafting a deed and amending it by an official notary. This deed will be deposited at the Dutch Chamber of Commerce. Some examples of what this deed should include are statutes, the name of the foundation including the “stichting” suffix and also its location. Intercompany Solutions can assist you during the entire registration process due to years of experience withing the field of setting up NGO’s.
What is the Dutch ANBI status?
ANBI is a Dutch abbreviation for: “Algemeen nut beogende instellingen”, which can be translated to institutions with a public benefit for the common good. ANBI’s usually are devoted entirely to serving a public benefit, such as a charity, cultural or scientific institution. The aim is not to generate profit, but to improve society as a whole or certain societal causes.
Tax benefits
ANBI’s may enjoy a variety of tax benefits. Some examples of these advantages include not paying inheritance or gift tax (when used for the public benefit), a (partial) refund of energy tax and more. Additionally, donors may also enjoy certain benefits such as subtracting the financial donations from their taxes. The ANBI status has to be requested through the Dutch Tax Authorities and is subject to strict conditions.
Conditions
In order to be eligible for ANBI status, an organization has to meet all conditions and criteria set by the Dutch Tax Authorities. These conditions are as follows:
- 90% of all business activities need to serve the public benefit
- ANBI’s may not pursue to generate any profit except for funding the public benefit
- All members and personnel have to meet strict integrity requirements (a statement of good conduct may be requested). ANBI status may be revoked if any person of importance within the ANBI is convicted or has been during the past four years
- No one may manage ANBI funds as if it were their own, additionally no single person may have a majority voice in the management of ANBI funds
- The ANBI may not possess more funds than reasonably required for performing its needed activities
- Board members may only receive (non-excessive) travel and attendance compensation
- An up to date policy plan has to be in place (this plan encompasses the way in which an ANBI wishes to achieve its goals)
- The balance between management costs and expenditures has to be reasonable
- Any funds that are left after dissolution of the ANBI have to be spent on an ANBI of a similar type
- The ANBI must comply with all of its administrative obligations
- The ANBI must publish specific information (such as name, contact details, global policy plan, remuneration policy and more) on either their own or on a publicly owned website
ANBI’s may lose their status, if they no longer comply with conditions and requirements as set by the Dutch tax authorities. This can have serious consequences for the continuity of your business, so if you want to acquire the ANBI status, it is advisable that you are absolutely sure you can comply with all the legally necessary requirements.
What is a Dutch SSBI?
SSBI is the Dutch abbreviation for “Sociaal belang behartigende instellingen”, which can be translated as social interest promoting institutions. SSBIs are usually organizations which serve the interest of their members, or a small target group. Additionally, SSBI’s may also have a social benefit. Some examples of SSBI’s consist of (but are not limited to) choirs, dance groups, sports organizations, hobby clubs, petting zoos, playgrounds, associations for staff, elderly and the neighborhood.
Tax benefits
SSBI’s are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. If you own an SSBI, you also do not have to pay any profit tax.
Conditions
In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. These conditions are as follows:
- Pursuing a social interest, this needs to be evident from the statutes or regulations of the organization
- Actual activities are in line with the pursuit of the social interest as per statutes and regulations
- The organization does not pay profit tax or is exempt from this
- Board members only receive (non-excessive) travel and attendance compensation
- The organization has to be located in the European Union, BES Island, Aruba, Curaçao or Sint Maarten
- Any donations or inheritances received are used in pursuit of the social interest of the organization
Intercompany Solutions can set up your Dutch foundation in just a few business days
Intercompany solutions can identify which legal form is best fitted for your interests and arrange all legal formalities needed for starting your own NGO. We can also help you with any questions you might have in this regard. If you require more information or would like some personal advice, you can contact us to discuss your options.
Sources:
https://ondernemersplein.kvk.nl/wat-is-een-ngo-en-hoe-start-u-er-een/
