Dutch private limited company (BV)
10.12.2017Edited 17.02.2022/XNUMX/XNUMX
If you are starting a business, one option is to register a legal entity in the form of a “private limited company” or in Dutch “besloten vennootschap” (BV). The main advantage of the BV is that it is an autonomous subject of law. This means that BV is independently responsible for its obligations, and the owners of the company are not responsible for them (with extremely rare exceptions).
It is possible to create a BV both individually and jointly with other individuals and / or legal entities.
Dutch BV structure
BV's equity capital is divided into shares held by shareholders. They make key decisions in the life of the company, and the directors of BV run the business on a daily basis. A BV may have a supervisory board in the corporate structure to oversee the board of directors.
In smaller BVs, the director is often the sole shareholder as well. In this case, he / she is called DGA (directeur-grootaandeelhouder).
BV establishment
To open (incorporate) a BV, you need to go through the following basic steps:
- Preparation of constituent documents (articles of association) of BV in accordance with the laws of the Netherlands;
- Registration of a notarial deed on the establishment of a company (with the involvement of a Dutch civil notary in corporate law);
- BV registration with KVK Handelsregister (Dutch Commercial Register);
- Obtaining a tax number by the company, if necessary - VAT number (BTW-nummer)
- Payment of the authorized capital of BV, the amount of which can range from € 0,01.
BV's activities in the registration process
You have the right to start working on behalf of the company even before you managed to open (register) a BV. In the period before the completion of the incorporation, you can act as "BV in the process of formation", in Dutch - BV in FOUNDATION, which is usually abbreviated to BV io.
Make sure you clearly state that you are acting on behalf of BV io when entering into any agreements with business partners. Until the completion of the BV registration, you will be personally liable for the obligations undertaken on behalf of BV io.
Responsibility
By opening a BV, you are not personally liable for the debts of your business. An exception may be cases when it is established that it was the unlawful interference of the shareholder or his unreasonable actions and instructions that led to the insolvency of the company. In this case, the court may hold the shareholder personally liable.
You, as a director of BV, can also be held personally liable if:
- You entered into overly ambitious agreements and knew (or could reasonably have foreseen) that BV would not be able to fulfill its obligations.
- You were unable to inform the Dutch tax and customs administration that you were unable to pay your taxes and social security contributions.
- You were unable to pay taxes and social security contributions as a result of mismanagement or negligence for three years before reporting this to the Tax and Customs Administration.
- Your BV was declared bankrupt due to mismanagement or negligence in the three years leading up to the event. An example of "mismanagement" is, in particular, the inability to keep annual reports and accounts.
- You made payments that you knew could potentially jeopardize the financial position of BV.
What to choose: a private enterprise or a private limited liability company (BV)?
If you are unsure whether to run your business as a sole proprietor (in the Netherlands: eenmanszaak, ZZP) or as a private limited company (BV), you should seek professional advice. Write us your questions to the address info@nalog.nl
The tax efficiency of a particular form of business depends on a number of factors, while the issue of personal responsibility also plays a key role in choosing the legal form of business (as you know, a private entrepreneur in Holland is liable for all his personal property).
Tax burden on profits from Dutch BV
To BV profit, i.e. the Dutch corporate income tax (vennootschaapbelasting, Dutch corporate income tax) is applied to the revenue minus the business expenses taken into account for each year. As of 2021, Dutch legislation established a corporate income tax rate of 15-25%, depending on the taxable amount of profit, while the exact rate and procedure for calculating the tax have recently changed annually. Contact us for an accurate forecast of the tax burden on your BV.
Withdrawal of profits (dividends) from the Dutch BV
The head of the company must complete a “payment test” (uitkeringstoets) if it is planned to withdraw capital from BV. Withdrawal is permitted in the presence of sufficient funds, in particular, in the absence of outstanding debts, the settlement of which may be hampered by the payment of dividends. This helps to protect the financial position of the business and safeguard the interests of creditors.
Withdrawal of dividends is carried out by the company after payment of corporate income tax BV (Dutch corporate income tax). Additional tax on dividends is payable immediately upon distribution. Its rate and payment procedure may vary depending on the tax residence of the recipient of the dividend from the Dutch company. Please contact us for an accurate simulation of your specific situation.
Submission of annual financial statements
A Dutch BV must prepare and submit annual corporate income tax and commercial reports to the Netherlands Chamber of Commerce (Kamer van Koophandel, KvK). The scope and content of reporting is determined depending on a number of characteristics of your company. We are happy to offer you accounting services for BV in the Netherlands, filing reports with the tax office (Belastingdienst) and full support of a Dutch company, incl. in Russian.
BV director salary
A common question is who can be a director of a Dutch company and should the director of a BV be a citizen or resident of the Netherlands? There are no restrictions in this regard, the director of BV can be a citizen and resident of any country.
In the case when the director does not have a share in the company (or has a share of less than 5%), he can be paid a salary not less than the minimum. The minimum wage in the Netherlands in the first half of 2022 is 1725 euros gross. Depending on the volume of employment, the director of the BV may receive part of this rate.
If you own at least 5% of shares in a Dutch BV, then you have a so-called “substantial interest” (aanmerkelijk belang) and you are a “director and major shareholder” (directeur-grootaandeelhouder, DGA) in the company.
As a DGA, you will have to pay income tax (inkomstenbelasting) on your salary, the minimum level of which is regulated by Dutch law. For 2022, Belastingdienst has set a minimum annual salary of a shareholder director of EUR 48 gross. At the same time, for DGAs owning more than 000% of the shares, the tax burden on this amount is less than on a regular salary, due to the fact that such a DGA is considered by the Dutch tax authorities as a self-employed person (self-employed). Contact us for an accurate calculation.
Business for sale in the Netherlands
If you want to sell your BV, you can either sell the company's shares or the business in the form of equipment, inventory, etc. As a DGA, you will have to pay income tax on the profits from the sale of your shares.
BV as a holding (Holding BV)
Dutch BV can be used as a holding, which implies that the main activity is the ownership of shares in other companies and other types of assets.
There is a widespread structure in which a businessman (beneficiary) owns, through a holding, shares of his operating (working) company. As a result, liabilities and risks are concentrated in the operating BV, assets are registered and stored separately at the holding. The holding also receives dividends that are not taxed until they are distributed from the holding to the ultimate beneficiary. Contact us for advice on the optimal structure for your business in the Netherlands.
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