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The Dutch BV (Besloten Vennootschap) also known as the private limited liability company (Besloten Vennootschap met beperkte aansprakelijkheid) is the most popular business form in this country. The Dutch BV is the equivalent of the German GmbH and the American limited liability company. Considering the new amendments brought to the Company Law, the incorporation procedure for a Dutch BV has been simplified and the costs related to setting up a company in the Netherland have been reduced. The BV is also the most employed type of structure when starting a business in the Netherlands.
Requirements for incorporating a Dutch BV
In terms of shareholding structures, the BV must have at least one shareholder who can be a natural or a legal person. The new Company Law in the Netherland allows the limited liability company to have one shareholder who can also act as manager. The Company Act only required the founder to issue one share with a voting right. It is necessary for the Dutch BV to have a local address.
Before the Dutch BV is registered, a deed of incorporation and the articles of association must be drafted before a public notary. These documents will be in Dutch and will contain information about the shareholders, the management board, the registered address, and the authorized share capital. The articles of association must also contain a brief description of the Dutch BV’s business activities.
If you are interested in setting up a BV in the Netherlands in 2021, our agents can help you.
The characteristics of the Dutch BV
The Dutch BV is a private limited company in which the assets of the investors are fully protected from the company assets, unlike in the case of the sole proprietorship. The BV has legal personality, it can enter into agreements and it may have registered share, which, however, are not transferable.
The BV in the Netherlands must pay the corporate income tax and it is also subject to other taxes, including a real estate transfer tax, social security taxes for employers and withholding taxes. Double taxation relief is possible under the double tax treaties signed by the Netherlands.
The attorneys at our Dutch law firm specialize in a wide range of issues concerning business and company law. They can assist you during all of the company formation phases as well as answer any particular questions that might help you decide if the BV is the right legal entity for your needs.
The main steps to incorporate a Dutch BV in 2021
The first step related to setting up a company in the Netherlands, such a Dutch BV, is having the company’s statutory documents drafted and notarized. The next steps one must take are:
- reserve a company name, which must be unique and must comply with the legal requirements imposed by the Commercial Law;
- submit the deed of incorporation and the articles of association with the Trade Registrar,
- obtain a registration number with the Commercial Register in the Netherlands,
- register with the social security authorities and with the pension fund for employment purposes.
We have also prepared a scheme with the main advantages of opening a Dutch BV in 2021:
Opening a bank account for a Dutch BV
The opening of a corporate bank account is mandatory when registering a BV in the Netherlands. However, its opening is not required before the registration of the company, it must be opened in order to prove the economic activity of the business. The bank account need not be opened with a Dutch bank, especially in the case of foreign ownership. If the shareholders decide to set up the account with a local bank, they must appoint a local director for the company and create the account based on the company’s Articles of Association and the Certificate of Registration issued by the Companies Register.
Our Dutch company formation consultants can handle the registration of a BV company remotelyon behalf of foreign investors. We can also help you with the procedure of setting up a company in the Netherlands.
- the all-in-one business license which is issued by the municipality in the city where the company will operate;
- import and export licenses which are useful for BVs involved in trading activities;
- financial licenses which are employed by companies in the financial industry, but also in other fields such as cryptocurrency;
- other special licenses issued by specific authorities, depending on the BV’s activities – among these food and liquor licenses are necessary for operating in the food and beverages sector.
The flex BV in the Netherlands
Considering the popularity of the private limited liability company, in 2012, the Dutch government decided to simplify the requirements related to the registration of a BV and this is how the Simplified BV Regime came into force.
Also known as the flex BV, this type of company resembles the regular BV with a few exceptions. In order to open a flex BV in the Netherlands, a local or foreign entrepreneur will be subject to fewer requirements among which a reduces share capital for the company. Until then a BV company was subject to a minimum share capital of 18,000 euros, but the flex BV was allowed to be created with a minimum amount of 1 euro.
Under the new legislation, the shareholders of a BV company are allowed to reduce the share capital without publishing the decision in the Official Gazette. They will only be requested to amend the Dutch company’s Articles of Association and notify the Trade Register.
The flex BV remains one of the preferred choices of foreign investors who want to open companies in the Netherlands in 2021.
Uses of a BV company in the Netherlands
The BV company has many advantages, one of the most important being related to the fact that this structure can be employed for various purposes. Among these are:
- the BV can be used by foreign companies establishing subsidiaries in the Netherlands;
- shelf companies usually take the form of Dutch BVs thanks to the fast and few incorporation requirements, but also to the hassle-free changes which can be brought to it;
- the BV can be used for trading purposes by foreign investors starting their businesses in the Netherlands;
- BV companies can also be used as offshore companies by foreign entrepreneurs.
Can I incorporate a BV without visiting the Netherlands?
Yes. Foreign investors can incorporate a Dutch BV without a personal visit to the country by employing our company to act on their behalf. This type of formation, however, does imply a slightly different procedure.
Can anyone set up a BV no matter where they are located?
Yes. The Netherlands is very open to foreign investment. Anyone from any country can become a shareholder in a Dutch Limited Company. To become a resident company, however (to have local substance) the investors must comply with certain requirements.
Can I set up an anonymous Dutch BV?
Certain Dutch structures can indeed maintain privacy. In this regard please see your options related to the creation of Dutch Foundation and nominee directors.
Why should I incorporate a Dutch BV?
The main reasons why business people choose the BV entity in the Netherlands are:
1) Tax benefits: Netherlands is a very good option to legally minimize your tax burden when doing business in EU and in the world in general.
2) Good local market: the Netherlands is one of the most prosperous regions in the world offering a local market with very good potential.
3) Excellent Transportation network: the Netherlands has perhaps the most important ports and transportation hubs in Europe.
Differences between the Dutch BV and the Dutch NV (Joint Stock)
The NV in the Netherlands has generally the same characteristics as the BV, but there are also important differences:
- the articles of association of a NV doesn’t have to include share transfer restrictions, but for a BV this is a must;
- the minimum share capital for a NV is EUR 45,000, while for a BV there is no obligation related to this aspect;
- a NV can be listed on the Stock Exchange, unlike BV;
- a BV can issue only registered shares and a NV have the possibility to issue both registered and bearer shares.
A NV must have a board of directors and the minimum number is one director regardless of his nationality who will be in charge with the management of the company.
Taxation of a Dutch BV
In order to benefit from double tax treaties signed by the Netherlands with other countries, it is recommended to have the majority of directors as Dutch residents and a business address in that country, which can be obtained traditionally, by opening an office, or by getting avirtual office. We offer you a useful virtual office package with a prestigious business address in Amsterdam and main cities in the Netherlands.
Companies registered in the Netherlands will pay corporate tax (between 20% and 25%), dividend tax (between 0% and 15%), VAT (between 6% and 21%) and other taxes related to the activities they have. The rates are subject to change, so it is recommended to verify them at the moment you want to incorporate a Dutch BV.
Companies that have a residence in the Netherlands must pay taxes on their income obtained worldwide, while nonresident companies will pay taxes only on certain incomes from the Netherlands. The corporate tax will be paid as follows:
- at a 20% rate for companies that obtain profits up to EUR 200,000;
- at a 25% rate for the amounts over EUR 200,000.
For more details about the taxation of a Dutch BV and setting up a company in the Netherlands, you may contact our local specialists in company formation.
We invite you to watch a video about incorporating a Dutch BV in the Netherlands:
Other details about the Dutch BV
Apart from the issues regarding registration, investors should also keep in mind some of the other characteristics or defining traits of the BV company:
•Shareholders: the BV can be incorporated by only one shareholder who can be an individual or another corporation.
•Directors: a minimum of one director is required, and he can also be an individual or a corporation.
•Shares: the share capital can be denominated in any chosen currency and the shares should have a par value.
•Registered office: the BV needs to have a registered office in the Netherlands; a virtual office can also be used.
•Accounting and audit: the company needs to maintain accounting records and prepare the annual statements; the audit is only required in some cases.
The tax year in the Netherlands is generally the same as the calendar year (although companies can use a different time period). The Dutch BV files its annual corporate income tax return annually. Auditing becomes mandatory when the company meets two of the following three criteria: it has total assets of more than 6,000,000 euros, it has at least 50 employees (full-time) or has a net revenue of at least 12 million euros.
Investors should know that they might commence trading even before the BV is fully set up. In this case, they will engage in business operations under a BV in formation, while the civil law notary is still handling the incorporation procedures. For the BV in formation, the abbreviation will be BV io. When operating in this fashion, it is important that investors remember to signal the fact that they are still under incorporation, so that clients or business partners are aware of this aspect. Sole traders who have decided to change their business form to a private limited company while still trading most often use the BV in formation. One of our lawyers in the Netherlands can give investors more details about changing the business form.
The private limited company is a convenient business form, one with a low incorporation capital, a set of simple formation steps and one that allows for a great degree of flexibility while investors retain limited liability, only to the amount of their invested capital in the company.
If this type of companies engages in trade activities in the EU or outside of the Union, it will need to obtain an EORI number.
According to statistics published by the Dutch Government, the private limited company is a preferred business form, as there are many businesses of this type incorporated every year:
-in the third quarter of 2019, there were 365,315 private limited companies;
-their number in the second quarter of 2019 was 363,125;
-there were 358,090 in the first quarter of this year;
-the number of BV companies in the Netherlands in quarter 4 2018 was 355,740.
The BV company is one of the best options for foreign investors in the Netherlands
The tax benefits offered by a BV company in the Netherlands
The Dutch limited liability company comes with several tax benefits for those looking to pay small taxes in the Netherlands. Even if it subject to the corporate tax, the government offers several deductions and exemption from a taxation point of view.
- corporate tax reductions if they engage in research and development (R&D) activities;
- corporate tax reliefs if they enter the innovation box or innovation credit programs;
- corporate tax deductions and breaks for the first 3 to 5 years of incorporation;
- the participation exemption regime if the BV has the Dutch holding company status.
For information on how to file tax returns for a BV in 2021, we invite you to get in touch with our specialists.
Taxation of a BV in 2021
At the level of 2021, the BV is one of the best choices for starting a business in the Netherlands from a taxation point of view. The corporate tax is applied at two rates depending on the profits of the company.
The first rate is set 19%, while the second one is 25%. However, Dutch BV can benefit from various tax advantages in 2021, among which tax deductions and exemptions.
Starting a business in the Netherlands in 2021 under the form of a BV is a great idea for those operating in the IT sector who want to work remote.
Those who want to open a company in the Netherlands can also be done by signing a power of attorney and designating a representative. If you need help with the registration procedure, please contact our company incorporation agents in the Netherlands. Furthermore, we can help foreign investors interested in establishing limited liability companies in other countries, such as Slovakia or Poland.