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Limited Liability Company Netherlands

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Starting a private limited liability company in the Netherlands

The Dutch designation for a private limited liability company is a BV (an abbreviation of the Dutch “Besloten Vennootschap”), which is simultaneously the most widely used legal entity in the country. The Dutch BV is also quite similar to the German GmbH, while in the United States, the entity is called an American LLC. All these foreign legal entities are the same in essence, meaning that they imply a private company with limited liability for its directors.

A BV is essentially a legal entity in which the available assets are divided into shares. The fact that the BV is a legal entity means it’s completely independent, hence the limited personal liability regarding debts you might make with the company. As a director or director-shareholder, you are employed by your own BV. In addition to your salary, you can reserve profits within the BV and build up your own capital. Do note that in the event of bankruptcy, the BV is liable for any debts. For many entrepreneurs, this private protection is the major advantage of the Dutch BV.

Some general traits of a Dutch private limited liability company

Founders and Shareholders

  • A BV can have multiple founders.
  • Shareholders can be individuals or legal entities.
  • Any individual shareholder can also be a director.

Capital Requirements

  • No minimum share capital required.
  • Since October 2012, a BV can have shares with a nominal value of EUR 0.01.
  • Previously, the minimum capital was EUR 18,000.

Shareholder Rights

  • Shareholders own the company's shares and hold the highest power.
  • Shareholders can vote on company decisions and may have rights to profit.
  • Different types of shares can be issued, some without voting or profit rights.

Directors and Management

  • Directors manage the company's daily operations.
  • Small BVs might have a single director who is also the main shareholder.
  • Supervisors can form a supervisory board or be part of the main board.

Incorporation Process

  • Must be arranged through a notary.
  • Requires a deed of incorporation and a shareholders' register.
  • The company must be registered at the Dutch Chamber of Commerce.

Accounting and Record-Keeping

  • Maintain accurate administration and archive data for 7 years.
  • Include accounting records, annual figures, tax returns, invoices, and receipts.

Tax Obligations

  • Pay corporate income tax.
  • Current rates: 19% for profits up to EUR 200,000, and 25.8% for profits above EUR 200,000.

Liability

  • No personal liability unless there is improper management.
  • Debts cannot be claimed from personal resources.

Starting a BV

  • You can do business before the BV is officially established, but must register in the trade register.
  • Inform partners that the company is "in formation" (BV i.o.).
  • Personal liability applies until official formation.

Foreign Entrepreneurs

  • Foreign founders become subject to Dutch corporate, dividend, and sales taxes.

Business Structures

  • A holding company (BV) owns shares of another BV.
  • Used to separate capital (like profit or pension) from business risks.

These are some very general traits of the Dutch private limited liability company. If you want to know more about the structure of a Dutch BV, you can read about it in detail on this page. The BV is a very versatile legal entity that is suitable for nearly every type of company. Thus, it is a very popular entity that is chosen by our customers in almost all cases.

Why the Dutch limited liability company is the most often chosen legal entity

Approximately 60% of all Dutch companies are of the private limited liability type. Most traders opt for this legal entity because of the general lack of private responsibility to cover risks related to the business, with only a few exceptions. In general, when there is no proof of improper management, all debts created by the legal entity are solely tied to the legal entity. Only when it is clear that you could have avoided certain issues, and you didn’t take appropriate measures to do so, can you be personally held liable for financial debts. But that is not the only advantage of a Dutch BV, on the contrary, this legal entity is popular for various reasons, which is why so many entrepreneurs choose to establish a Dutch BV.

In short, setting up a BV has the following advantages:

  • The BV is a Dutch legal entity that provides limited liability
  • You have the option to divide your property and financial risks among several BVs via a holding company structure
  • Create the perfect company structure
  • The mandatory starting capital is only 1 euro
  • You only pay 19% or 25.8% tax on the profits of your BV
  • A (partial) sale of the company is fiscally attractive
  • You can attract new investors through the issuance of shares
  • Reinvest profits tax-free
  • It is possible to divide tasks amongst multiple people to lessen your workload
  • Business succession is made easy
  • You always make a professional impression with a BV

We will discuss these advantages in more detail below.

Limited liability

As we already discussed above, a Dutch BV enjoys limited liability. This means that it is not the board but the BV itself that is liable for any debts. A director of a private company can only be held liable if there is proof of improper management. This applies, for example, if the accounting is not in order or if the annual accounts have been submitted too late to the Chamber of Commerce. The error must then be attributable to the person in question. In all other cases, you will enjoy the protection of limited liability.

Spread risks via a holding company structure

One of the main benefits of a Dutch BV is the possibility of setting up a holding structure. It is possible to protect valuable property with a special construction, such as intellectual property and goodwill. For this purpose, a holding company must be set up in which all the valuable property of the working BV is housed. You can merge multiple BVs into a holding structure. By setting up a holding company, you indicate that several BVs fall under one parent company. However, the holding structure is set up in such a way that they remain separate BVs. So, you do not run the risk that all your companies will go bankrupt if one of the BVs goes under. If the working BV goes bankrupt, everything housed in the holding company is safe. Creditors cannot recover this. Thus, you can store profits in the holding BV, in the knowledge that these assets will be safe whatever happens.

You can create the perfect company structure

Next to simply setting up a holding structure, you can actually tailor your business to your personal preferences. Maybe you want to establish multiple BVs within very different niches or markets but would still like to link all the companies together. Using a Dutch BV, you can set up the perfect structure so that you can get the most out of your companies from a fiscal as well as a legal perspective. If you are involved in multiple activities, you can easily separate them across multiple BVs. This risk spread allows you to limit any damage in the event of liability or bankruptcy. In terms of tax, the structure can be set up favorably through a holding company to make use of the fiscal unity for corporate tax and VAT.

Low mandatory starting capital

In the past, it was mandatory to invest a starting capital of €18,000 when setting up a BV. This made it very difficult for starting entrepreneurs to enjoy the benefits of a Dutch BV, even when their business ideas were stellar. Fortunately, this rule has now been changed. Since the introduction of the so-called ‘Flex-BV’ in 2012, you can now set up a BV with a starting capital of just 1 euro. This euro is then generally spread throughout 100 shares. Thus, the high investment threshold no longer applies, making the private limited liability company much more accessible to a wider public.

Low tax on profits

In general, the Dutch BV has the added bonus of paying relatively low taxes on the profits you make. For example, the Netherlands has a very low tax rate compared to some neighboring European countries. Also, when you have a sole proprietorship, you pay income tax on the profits. The highest tax bracket in this category is currently 52%. You also pay tax on the profits of a BV, but this is only 19% or 25%, depending on whether your profits exceed the total annual amount of 200,000 euros. Keep in mind, though, that you will still need to pay income tax on the profits you distribute to yourself. You can also pay yourself dividends, which could be more profitable in some situations. We have covered the topic of paying yourself dividends extensively in this article.

It’s fiscally attractive to (partially) sell the BV company

At some point, it might become favorable to sell your company. Maybe you become very successful and would like to sell your company for profit, or maybe you would like to invest in a new idea? This is all possible with a Dutch BV. 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. The profit is therefore released in its entirety to the holding company. From there, you can easily invest further or pay it out to yourself.

Find new investors through the issuance of shares

In addition to selling shares for profit, you can also easily attract investors. Asa BV, you can easily raise new capital by issuing shares. It is attractive for potential lenders to invest in the BV through these shares, since a shareholder runs a limited risk. Don’t forget that shareholders of a Dutch BV are only liable for the amount they have invested. It is therefore beneficial for investors to invest in a BV. The investor obtains shares for the amount they invest. This also makes the investor partly an owner of the BV, and thus, he or she shares in the profits, but they are not liable for any debts. Due to the fact that the roles of shareholder and director are separated within a private limited company, the investor can play a passive role in the BV. This leads to the investor taking only a limited risk.

Option to reinvest your profits tax-free

If you are not interested in paying out all taxable profits to yourself but want to invest in the company instead, then this can easily be done with the Dutch BV. You only pay corporate tax (19% or 25.8%) on the profits you generate and use the rest to reinvest. Do you have multiple companies and a personal holding company? You can then simply use the profits from one BV to fund the start-up costs of the second BV without first paying them out as a dividend. This enables you to use your own money tax-free.

Divide tasks for a lesser workload

One of the pitfalls of a sole proprietorship is that you have to take care of all business-related matters all by yourself. A sole proprietorship is run only by you, so there is no staff involved. If, however, your company starts growing fast, this can become a massive issue. You will not have enough time to take care of all company activities, and your business might stagnate as a result. If you own a BV, you can choose to divide the tasks of your company among several people. This way, you can appoint different people to take on the duties of director, shareholder and founder, as well as other managerial and administrative positions, so you don't have to do it all alone. It’s much easier to hire staff when you own a BV.

Easy ways to deal with business succession

Would you like your children to profit from all your hard work in the future? The BV is ideal for making preparations for a possible business succession. From a tax perspective, the company can be transferred favorably to your successor(s). The most common structure for business succession is the holding company structure. This allows the sale to take place tax-free due to the participation exemption for the seller. Even in the case of the death of the director-shareholder, the shares can be transferred to the heirs without (immediate) settlement by applying certain tax facilities. Intercompany Solutions can inform you about the details.

A professional impression

Last but not least: you make a professional impression when you own a private limited company. In general, you don't just set up a BV. To be able to do so, you must meet a number of requirements and have the deed of incorporation executed by a notary. This notary also has the duty to investigate the BV when they believe that something is wrong. In addition, a BV must have its administration in good order, and an annual overview must be submitted to the Chamber of Commerce in the form of annual accounts. The chance that a BV has its affairs properly in order is therefore many times greater than with a general partnership or a sole proprietorship. The average Dutch person also knows this, and this contributes to the professional character of your company. In addition, international clients will take your company much more seriously as well.

As you can see, the Dutch BV is a formidable legal entity that far outweighs most other legal forms due to the high number of benefits you can expect from establishing a BV. Next to being a favorable entity, the Netherlands is also a beneficial country to set up a company. We will discuss why in detail below.

Why start a company in the Netherlands?

The Netherlands is a very welcoming country when it comes to foreign entrepreneurs. Next to being structurally listed in the top ten of many prestigious business-related lists and indexes, the Dutch are also very focused on continuous innovation, growth and cooperation. The Dutch government also actively stimulates innovation by encouraging national and foreign companies to develop innovative products. This is being done through several tax benefits, innovation credits or subsidies. The government aims to realize multiple goals via a so-called mission-driven innovation policy. On July 13, 2018, the Dutch cabinet introduced this with a letter to parliament. This innovation policy focuses on 4 very important social themes:

  • The current energy transition & sustainability
  • Agriculture, water and food
  • Health and care
  • Safety

Furthermore, the central government has drawn up separate 25 missions for these 4 themes, for example the following:

  • More healthy years of life for citizens
  • Reduced greenhouse gas emissions
  • Enough clean water and safe food
  • Affordable and sustainable energy
  • A safe country

In addition, the Dutch government identifies key technologies such as photonics and artificial intelligence that will play a central role in the very near future. Thus, the Netherlands can provide solutions to global challenges in these areas, and you might also be a part of these missions, if your company fits within this framework. The government will actively invest in multiple top sectors that cover these topics. These innovative Dutch top sectors are among the best in the world, in which the Netherlands excels internationally. This concerns the following 9 top sectors:

  • Top sector Horticulture and Propagation Materials
  • Top sector Agri & Food
  • Top sector Water and Maritime
  • Top sector Life Sciences and Health
  • Top Sector Chemistry
  • Top Sector High-Tech Systems & Materials
  • Top Sector Energy
  • Top sector Logistics
  • Top sector Creative Industry

If you would like to open a successful company and also be an important part of future plans, the Netherlands is definitely one of the best countries to start a business. Next to being innovative, the Dutch also have a fantastic modern physical and digital infrastructure. This will immensely aid any company that is involved in logistics, imports and exports, as well as digitalization. If you are looking for subsidies, please feel free to contact Intercompany Solutions for more detailed information. We can figure out for you whether the Dutch government can assist you in building your company.

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What are the main differences between a Dutch public and private limited liability company?

In addition to a private limited liability company, the Dutch also provide the option of establishing a public limited liability company. There are many similarities between the two legal entities, but there are also some noteworthy differences. We often receive questions about the differences between these two business forms, so we made a quick overview of all the similarities and differences below.

The main similarities between a Dutch public limited liability company and a private limited liability company

There are several similarities between a Dutch BV and an NV. Firstly, both are legal entities that possess capital, which is divided into shares. If you own at least 5% of the shares within the company, then these are taxed as benefits in Box 2. For both entities, the customary salary scheme applies. Furthermore, both company forms are liable for corporate income tax. And in both cases, the director or shareholder is not jointly and severally liable unless there is a definite case of improper management that can be proven. As you can see, these two types of companies share some common characteristics that make them somewhat similar. Nonetheless, there are also some noteworthy differences to consider.

The main differences between a Dutch public and private limited liability company

One of the most notable differences between a Dutch NV and BV is the start-up capital you will need as an entrepreneur. The required minimum share capital for an NV is currently set at 45,000 euros, which is quite a hefty sum, especially for starting entrepreneurs. The BV, however, only requires you to deposit a minimum of 1 euro share capital. Please note that this used to be 18,000 euros in the past, but this changed due to the introduction of the Flex-BV. So, a BV is much more accessible.

Secondly, the BV only has non-transferable registered shares, whereas the NV has bearer shares that are transferable. Next to that, the BV has the option of issuing shares without either voting or profit rights and a flexible voting ratio scheme, whereas the NV doesn’t have any special share types. Furthermore, there are no restrictions on receiving shares within a BV, but if you own an NV, there might be certain restrictions on financial support for receiving shares. Lastly, with a BV you will need to carry out a balance test and a distribution test for distributions, whereas only a balance test is needed within an NV. It is advisable that you partner up with an experienced party if you want to make an informed decision regarding the best company type for you. Intercompany Solutions can perfectly assist you with such matters.

Registration of a limited liability company in the Netherlands

In addition to a private limited liability company, the Dutch also provide the option of establishing a public limited liability company. There are many similarities between the two legal entities, but there are also some noteworthy differences. We often receive questions about the differences between these two business forms, so we made a quick overview of all the similarities and differences below.

The main similarities between a Dutch public limited liability company and a private limited liability company

There are several similarities between a Dutch BV and an NV. Firstly, both are legal entities that possess capital, which is divided into shares. If you own at least 5% of the shares within the company, then these are taxed as benefits in Box 2. For both entities, the customary salary scheme applies. Furthermore, both company forms are liable for corporate income tax. And in both cases, the director or shareholder is not jointly and severally liable unless there is a definite case of improper management that can be proven. As you can see, these two types of companies share some common characteristics that make them somewhat similar. Nonetheless, there are also some noteworthy differences to consider.

The main differences between a Dutch public and private limited liability company

One of the most notable differences between a Dutch NV and BV is the start-up capital you will need as an entrepreneur. The required minimum share capital for an NV is currently set at 45,000 euros, which is quite a hefty sum, especially for starting entrepreneurs. The BV, however, only requires you to deposit a minimum of 1 euro share capital. Please note that this used to be 18,000 euros in the past, but this changed due to the introduction of the Flex-BV. So, a BV is much more accessible.

Secondly, the BV only has non-transferable registered shares, whereas the NV has bearer shares that are transferable. Next to that, the BV has the option of issuing shares without either voting or profit rights and a flexible voting ratio scheme, whereas the NV doesn’t have any special share types. Furthermore, there are no restrictions on receiving shares within a BV, but if you own an NV, there might be certain restrictions on financial support for receiving shares. Lastly, with a BV you will need to carry out a balance test and a distribution test for distributions, whereas only a balance test is needed within an NV. It is advisable that you partner up with an experienced party if you want to make an informed decision regarding the best company type for you. Intercompany Solutions can perfectly assist you with such matters.

Frequently asked questions regarding
the Dutch private limited liability company

Can I form a BV company in the Netherlands?

Yes, starting a business in the Netherlands is an option for residents of any country. The Netherlands has very welcoming regulations for foreign investors and entrepreneurs. Next to that, you also do not need to be physically present to start a company in the Netherlands. This makes it possible for many foreign entrepreneurs to enjoy the advantages of a Dutch business remotely.

How can non-residents form a BV company in the Netherlands?

If you want to establish a Dutch company, you will need some basic documents and data 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. 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.

When is the best time for Dutch company formation?

You can start a company in the Netherlands at any given point in time, provided you already have all the necessary data and documents for company formation. If you want to establish a company that deals with seasonal goods or services, it is generally smart to incorporate the company within a timeframe before your goods and services will be needed, as this will give you enough time to settle in and start all preparatory activities.

Which taxes will I have to pay when I own a Dutch BV company?

If you wish to establish a Dutch BV, you will have to pay corporate income tax. This is currently set at 19% for all profits below the sum of 200,000 euros. If you exceed this amount, you will have to pay 25.8%. In addition to corporate tax, you will also have to pay the VAT you charge clients to the Dutch tax authorities. The current rate for dividend tax is 15%. And if you want to pay yourself a salary or hire staff, you will also have to pay income tax. Please consult us for more information about this subject if you are unsure.

Can I open a Dutch subsidiary with my current holding company?

Yes, it is entirely possible to open a Dutch subsidiary that falls under your current parent company. The registration process is generally the same. You can authorize us to handle matters on your behalf, after which we go to the notary and incorporate a subsidiary for you. Keep in mind that, in principle, the director-shareholder salary applies to every director-shareholder of any Dutch BV, unless the director-shareholder lives and works outside the Netherlands in a country that has not recognized our salary scheme in a tax treaty with the Netherlands. Also, be careful when opening a bank account. Compliance from the bank usually requires at least one director based in accordance with the laws regarding an ultimate beneficial owner (UBO). You can read more about the UBO register in this article.

Who can help with Netherlands company formation for non-residents?

There are many companies that offer assistance with Dutch company formation. Intercompany Solutions is one of these companies. We offer you a very wide variety of expertise that we have built up over the years, combining extensive knowledge with practical experience. This enables us to take care of business very rapidly since we are personally acquainted with all the important players and organizations within the field.

Where can non-residents form a company in the Netherlands?

If you want to establish a Dutch BV, you will need an existing physical address for your company. This is required by Dutch law: your business needs to be incorporated within the country itself to qualify as a Dutch BV company. If you want to open a subsidiary for an already existing holding company, these same rules apply. There are many possibilities in this regard, such as hiring an office space at a strategic location. If you are opting for a logistics company, we suggest you pick a location next to an accessible travel route. The Netherlands houses the port of Rotterdam and the internationally well-known airport of Schiphol, which are never further away than a 2-hour drive from any location. If you want to hire staff, we suggest you pick a location that can easily be accessed via public and personal transportation. Alternatively, you can also opt for a virtual office if you don’t plan on being physically present in the country. There are many companies offering office space or simply a registration address, you can search for these companies via the internet. Make sure you choose a reputable partner. You can check any company in the trade register and look for customer reviews to be certain.

How do I create a BV company in the Netherlands?

There are a few documents you will need to provide if you plan to establish a Dutch business formally. In general, you will need a valid form of identification, a preferred company name, and the legal entity you wish to set up. Furthermore, you will need to invest a bit of money to pay for the registration procedure. Other than that, you don’t really need anything apart from a very good business idea and, preferably, a business plan. This will make applying for financial support much easier for you if you need a start-up investment, for example. You can outsource the rest of the work to Intercompany Solutions, as we have many years of experience with Dutch company formation.

Am I really not personally liable for any debts I create with a Dutch BV company?

One of the main benefits of a Dutch BV is the limited liability for directors and shareholders. This means that you won’t be personally held liable for any financial issues that your company might have to endure. Nonetheless, there are some exceptions. If you have consciously done something that can be held against you, then this can be classified as improper management. In such cases, there is a chance that you will be held personally liable. So, make sure you always act according to the law, since there is no risk of any liability when you handle matters correctly.

Where can I find information on Netherlands company formation costs?

The costs for company formation are not standardized, as every company is different and thus will require a variety of actions for incorporation. In general, you will need to consider that there are registration fees, costs for a notary, possible translation costs for the deed of incorporation, the costs of opening a Dutch bank account, and the fee for our services. If your company requires certain permits, then these costs also need to be added. If you want to move to the Netherlands yourself, you will also have to add possible fees for a work permit or visa. Furthermore, if you require further assistance, there will be extra costs for additional services. We offer a standard start-up package of 1499 euros without any hidden fees or costs for standard procedures. Please contact us for a personalized quote, if you want to be absolutely sure regarding the costs of Dutch company registration.

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