Before starting to do business in the Netherlands, you will of course want to make sure you are thoroughly prepared, for example by drawing up a business plan and mapping any import obligations. You also need to decide on the form the Dutch company will take:
Which legal forms are commonly used for international enterprise?
How do you set up a private limited company or public limited company?
What legal obligations will you face, regarding for example the financial statements?
Which considerations and consequences do you need to take into account?
Our experts discuss a number of frequently used options from a legal and tax perspective.
Commonly used Dutch legal forms
Foreign businesses often opt to set up a Dutch legal entity, such as a private limited company (bv) or public limited company (nv). Shareholders of both these types of companies are in principle only liable for the amount they have contributed (usually the amount they paid for the shares). In contrast to partnership companies, personal liability is excluded here. In partnership companies, such as a partnership, general partnership or limited partnership, the partners’ personal assets are not protected against liability for the company’s debts.
Use of a Dutch legal entity can make it easier to do business. Dutch investors are familiar with the structure of a private or public limited company. This makes investing in these types of companies more appealing for them than investing in a legal entity set up under the law of a different country. Potential clients may also be more comfortable doing business with a Dutch legal entity than a foreign legal entity.
Please note: if you do business in the Netherlands, you may be liable for tax even without a legal entity. Read more about Dutch corporate income tax here.
How do you set up a bv or an nv?
Setting up a private limited company (bv) is relatively simple and is done by drawing up a notarial deed, which sets out the company’s articles of association. Starting capital is no longer required: a private limited company can be set up by depositing € 0.01 on the shares. The private limited company’s shares are registered and cannot be traded publicly (on a stock exchange, for instance). This prevents unknown parties acquiring control over the company.
A public limited company (nv) is also set up via a notary and notarial deed. However, unlike a private limited company, a starting capital of € 45,000 is required, and shares are transferable (on a stock exchange, for instance). In order to transfer these shares, the intervention of a notary is not required. For this reason, public limited companies are more suited to large shareholder structures.
The cooperative: a vehicle for international enterprise
In addition to the bv and the nv, the cooperative is another Dutch legal form. This legal form is a type of partnership whose capital is not divided into shares. Cooperatives have members rather than shareholders. This type of legal form is regularly chosen internationally, partly because under certain circumstances, a cooperative is not considered a withholding agent for dividend tax purposes. If you would like to learn more about cooperatives, your advisor can provide further information.
Administrative obligations for legal entities: what you need to know about financial statements
It is mandatory for legal entities to keep accounts and records that adequately clarify the company’s transactions and financial position.
All large and medium-sized legal entities are usually expected to compile annual financial statements including a financial report and have them audited. Small legal entities do not usually need to compile full financial statements. Small and medium-sized legal entities are entitled to certain exemptions when it comes to the form and content of their financial statements.
Financial statements must comply with specific accounting standards (Dutch GAAP). Alternatively, financial statements may be compiled in line with the International Financial Reporting Standards (IFRS). It is mandatory for companies listed on an EU stock exchange to compile their financial statements in accordance with the IFRS. Financial reports must be published in Dutch, English, French or German. Financial statements may be in a currency other than the euro.
Other financial statement requirements:
Must be compiled within five months of the end of the financial year, with the possibility to extend this term by a maximum of five months in exceptional circumstances;
Shareholders then have two months to adopt the report;
The financial statements must be filed annually with the Dutch Chamber of Commerce. This must be done within eight days of adoption of the financial statements.
You can read more on these obligations here.
We are happy to advise you
International enterprise demands thorough preparation. The choices you make have direct implications for your tax position and the success of your international growth. Make sure you obtain sound advice before starting out. At Baker Tilly we have the in-house expertise to provide you with both legal and tax services.
Contact
Want to know more? Contact our advisors, who would be happy to help you with your international enterprise!
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
