TYPE OF BUSINESSES IN THE NETHERLANDS

You can opt for different types of legal structures when setting up a business in the Netherlands. Your decision depends on several facts such as expected turnover, type of activities, risks etc. It is important to discuss the pros and cons of every business structure with your advisor to make sure that the structure you choose, is the one most suitable for your situation.

Sole proprietor (Eenmanszaak)

The most straightforward way of starting your own business is through a sole proprietor. The only requirement is that you need to register the business at the Chamber of Commerce.

Partnership (Vennootschap Onder Firma)

A partnership can be best compared to a collaboration of two or more sole proprietors.

Limited partnership (Commanditaire Vennootschap)

A limited partnership is a collaboration of sole proprietors and investors. The investors don’t have an active role in the company and are not personally liable.

Legal entity with limited liability (Besloten Vennootschap)

In Dutch a B.V., can only be incorporated by a notary. The B.V. has its own liability, therefore the director shareholder is, in principle, not liable.

Using the B.V. changes the way your revenues will be declared for tax purposes. Your own salary, which you will need to take out is taxed with income taxes in box 1, and remaining profits can be paid out as dividends (taxed in box 2). Administratively, a B.V. is bit costlier to run. There are two important factors that can make a B.V. worthwhile:

• Limitation of your personal liabilities
• A tax benefit when profits are high (over appr. € 150,000 p.a.)

Would you like advice on which type of business would be the best in your situation? Broadstreet can explain all the pros and cons of the various types of businesses in the Netherlands. Broadstreet can assist in the incorporation of a Besloten Vennootschap and help you determine the best way to incorporate.