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The Netherlands offers two options for registering a company with limited liability (LLC) of the shareholders: a public LLC or Naamloze Venootschap abbreviated as NV, and a private LLC, Besloten Vennootschap, abbreviated as BV.
Both the NV and the BV represent separate legal entities.
The requirements for BVs are almost identical to the ones for NVs, but there are some differences between the entities. The main ones are outlined below:
The Director of a company with limited liability established in the Netherlands does not have to be a national or a resident of the country.
Even other corporations can perform the functions of Managing Directors. The Managing Board (composed of a minimum of one Director) deals with the administration and management of the LLC, its daily routine and business operations. The Managing Board represents the LLC.
In case the Board includes several members, the Articles / Memorandum of Association (AoA / MoA) must specify whether the Dutch LLC can be represented individually by each member, or joint action is required. Regardless of the distribution of obligations and tasks among the Directors, each of them can, generally, be held personally liable with regard to the company’s debts.
The Board of Supervisors does not have executive powers and cannot represent the LLC. Its purpose is to monitor the operations of the Managing Board and the main course of development of the business, to support the activities of the Management and to always act in agreement with the best interests of the LLC. In this respect the AoA can require the prior approval of the Board of
Supervisors for particular transactions. The establishment of a Board of Supervisors is not mandatory for the incorporation of a Dutch LLC. It is rather an instrument that can be used by the Shareholders to monitor the operations of the Managing Board.
A Dutch LLC is established by a minimum of one incorporator through the execution of an Incorporation Deed before a Latin Notary. The Deed contains the new LLC’s constitution that is considered as company law. It must cover all procedures of the entity and is relevant to all operations of the newly established company.
Deed of incorporation Netherlands includes the AoA that present the following information:
Tha Managers and Supervisors are personally liable, either to the LLC or third parties, in any of the cases listed below:
In the beginning of October, 2012, a new Act on BVs was adopted in the Netherlands abolishing the requirement for minimum capital of 18 000 EUR.
The waiver of this requirement means there is no need to present a bank statement during the procedure of incorporation.
The new flexible legislation brings the obvious benefit of allowing entrepreneurs to establish Dutch LLCs company without the need to sacrifice limited resources at the start of their new ventures
The main reasons why business people choose the Netherlands BV entity 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: Netherlands is one of the most prosperous regions in the world offering a local market with very good potential.
3) Excellent Transportation network: Netherlands has perhaps the most important ports and transportation hubs in Europe.
Another main benefit, that might prove to be even more significant than the previous one, is the flexible procedure for issue of shares. Now voting and distribution of rights related to profit are optional.
Therefore the private LLC can manage more efficiently its Shareholders’ interests and general social objectives. Shares can be separated into classes, depending on the rights and the level of the Shareholders.
In addition, the BV Act allows the denomination of shares in currencies different from the Euro, which was restricted under the prior regulations. Other important characteristics of the new legislation are highlighted below.
In summary the new Act on BVs adopts the changes listed below (among others):
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 a virtual 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 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 Dutch corporate tax will be paid as follows:
For more details about taxation of a Dutch BV, you may contact our local specialists in company formation.
The BV needs to be officially registered in front of a notary public. If the Shareholders cannot be present in person, then they may assign Proxies through a certified Power of Attorney (PoA) with apostille or a Mandate. Then proxies can act in the capacity of Incorporators and initially subscribe the BV’s shares, then transfer them to the Shareholders.
The Shareholders / Proxies must present the Incorporation Deed of the company to the notary public. The requirement for a bank financial statement to confirm that the minimum capital has been deposited not valid anymore, thanks to the BV Act of 2012.
Within 7 days after the presentation of the executed Incorporation Deed to the notary public the private LLC has to be included in the Registry at the Chamber of Commerce and Industry with its registered address.
Until inclusion in the Commercial Registry the Directors of the LLC are jointly and personally liable for any binding transactions concluded at the time of their management.
Importantly, among other things, the Dutch LLC needs to register its official name, date and place of formation, description of its business operations, number of staff, management details and information regarding the signatories and any existing branches.
The range of activities of a private LLC is not subject to any restrictions, if they do not contradict the general ethics or the provisions of the law in the Netherlands. The purposes of the BV are also included in the Registry at the Chamber of Commerce. Some activities in the country require the issue of a license.
The Articles of Association can be fully or partially amended by holding a general meeting of the Shareholders.
Any amendments enter into force upon the execution of an Amendment Deed before a notary and must be drafted in Dutch. Rights of third parties (that do not act in the capacity of Shareholders) granted by virtue of the Incorporation Deed can be amended only with the consent of the third parties.
In the Netherlands LLCs are taxed with respect to their income generated worldwide.
The current rate of corporate tax is 20 – 25%. Dividends from interests qualifying for exemption (the so called “participation exemption”) are not taxable as corporate income.
The exemption is granted due to the assumption that the proceeds from profits already taxed as corporate income.
In the Netherlands profit distributions, such as dividends and liquidation payments exceeding the contributed equity, paid by Dutch LLCs are taxed with 15% withholding tax.
The rate can decrease in cases when non-residents receiving dividends are eligible for tax reduction by virtue of a relevant treaty on taxes concluded by the country or the EU Directive on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.
Under particular conditions it is possible to circumvent the withholding tax on dividends in the Netherlands by using a local cooperative.
Interest, rentals and royalties paid by resident Dutch LLCs to non-resident entities are not subject to withholding taxes.
Dutch LLCs have to submit annual reports on their transactions and activities in line with specific requirements listed in the local Commercial Code. According to the Code each LLC has to prepare a yearly report using a specific format. The report must be signed by all Managing Board members and, if necessary, by the Board of Supervisors at the company.
The Commercial Code specifies a number of regulations and rules regarding the auditing, reporting and filing that depend on the Dutch LLC’s classification.
All Dutch LLCs, excluding the ones classified as small businesses, are required to use the services of an auditor who shall review their yearly report and prepare an opinion.
The annual declarations on tax liabilities need to be submitted electronically no later than five months after the financial year’s end. If necessary, companies can apply for an extension of this period (maximum eleven months). The period for fiscal carry-back of tax losses is one year and for carry-forward – nine years.
Dutch LLCs are often preferred in terms of tax planning as intermediate finance and / or holding entities.
The possibility for participation exemption in combination with the numerous tax treaties signed by the country allows entrepreneurs to save on taxes on distributions of profit by investments that are owned by shareholders of the LLC that do not reside in the Netherlands.
The names of Directors and Shareholders do not appear on public record.
Filed at the Companies Registry are the incorporation documents, which include details of the Registered Office and Registered Agent - new companies in the BVI have to disclose their business activities.
The BVI Business Companies Act has been amended to introduce a requirement for all British Virgin Islands companies to file a copy of their register of directors with the Registrar of Corporate Affairs, this can made made available or selected to be kept private.
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