Netherlands Entity Setup

Separate and distinct legal entity. Managed by a board of directors, which is responsible for making major business decisions, overseeing the general affairs and running the day-to-day operations of the BV. Directors are appointed by the shareholders of the BV. A BV can have a supervisory board to supervise the policies of the board of directors and the general course of affairs of the BV and its affiliated business. It is also possible to create a so-called 1-tier board, consisting of executive and non-executive directors.

A Stichting, or Foundation (the two words will be used interchangeably in this Commentary), is a legal entity established under Dutch law. The purpose of the Foundation, outlined below, can be widely worded or narrowly defined. It has full legal personality and may acquire and dispose of assets, grant security, or provide guarantees.

A STAK structure (Stichting Administratiekantoor in Dutch) is a type of Dutch Foundation available in the Netherlands. It is a voting trust foundation, but there are no shareholders or share capital, which makes the entity slightly different from other corporate structures.

N.V. is an acronym for Naamloze Vennootschap, a public limited liability company in the Netherlands and other Dutch-influenced nations. An N.V. issues shares to shareholders who have the power to make decisions about the company.

A vennootschap onder firma, or general partnership, is a business that is run by two or more business partners. A defining aspect of the VOF is that every partner contributes something to the business, whether it’s labour, capital, assets, goodwill or knowledge.

No minimum capital requirement. Issued capital can be as small as EUR0.01 (or 1 cent in any other currency).

None from a pure legal perspective, however tax substance rules require that at least 50 percent of the board consist of Dutch tax resident directors.

A BV must have at least 1 director. Tax substance rules require that at least 50 percent of the board consist of Dutch tax resident directors. There is no requirement to have any officers (which under Dutch law are proxy holders to whom the board of directors of the BV can grant representation powers).

Not required but recommended.

An office address (in or outside the Netherlands) is required for incorporation. The office address of the BV must be registered in the Trade Register within 1 weekafter incorporation. Tax substance rules require that the BV has its office address in the Netherlands. 

If you set up a company in the Netherlands, you must choose a company name (trade name). The company name must meet the conditions of the Trade Name Act (Handelsnaamwet). This basically means that you have to choose a name that is unique in the sector and region in which you operate. You should actively use your company name in order to be protected by the Trade Name Act. You can do this for instance by displaying the name on your website, your building, or your communication. You have to submit the company name when registering with the Chamber of Commerce (Kamer van Koophandel, KVK). They will pass on your details to the Dutch Tax and Customs Administration (Belastingdienst).

After you have described the articles of association, the civil-law notary will draw up the deed of incorporation containing the articles of association. Usually, the notary files the articles of association, or any changes to them, digitally at the Netherlands Chamber of Commerce KVK. This is called deposit.

For businesses resident in the Netherlands, KVK will pass on your details to the Netherlands Tax Administration (Belastingdienst). You do not need to register separately. The Tax Administration will issue you with a VAT identification number (BTW-id), to use for correspondence and invoices to your customers, and a VAT tax number (BTW nummer), to use for your dealings with the Tax Administration. You will receive these numbers from the Tax Administration by post.

The chamber of commerce in the Netherlands is called the Kamer van Koophandel or simply ‘KvK’. Unlike in some other countries, this is a public institute where all business activities in the Netherlands are registered. When you set up an organisation that is a legal entity, you will first need to go through a notary. This notary will take care of the registration in the Dutch Business Register at KVK.

The final step is to decide the bank to work with. Netherlands has a world class banking infrastructure that startups and hyper growth companies alike benefit from. The process of establishing a bank account can be an unexpectedly long process that many companies do not sufficiently plan for. This can include extensive application documents, notarized director documents, KYC documentation and in person signatures. Common local banks in Netherlands include ING, ABN AMRO, Revolut, Cooperatieve Rabobank UA and SNS Bank.

In the Netherlands, you pay income tax over your taxable earnings. This is called inkomstenbelasting. Taxable earnings are your earnings minus deductibles and fiscal schemes, such as costs made for your company or amortisations. If your legal structure is an eenmanszaak or vof, you file an income tax return. If your legal structure is a bv, nv, or other legal entity, you file a return for corporate income tax.

LEI stands for Legal Entity Identifier. It is a unique number that the Dutch Financial Authority AFM uses to trace global transactions. Companies that are legal entities (for instance private or public limited companies) are required to have a LEI if the company is a foreign legal entity, but registered in the Handelsregister, the Dutch Business Register (f.i. a branch) and trades on the stock exchange.

The RSIN number (Rechtspersonen en Samenwerkingsverbanden Identificatie Nummer in Dutch) is an identification number for legal entities and partnerships. It is the business equivalent of the Citizen Service Number (or BSN), and is used to link data between basic Dutch government registrations.

When you register with KVK, you are listed in the Dutch Business Register (Handelsregister). You are then given your 8-digit KVK or HR number. This number serves to prove that you are indeed a bona fide, registered business. Other companies you do business with can look up your details in the Business Register. 

The BTW-nummer is the VAT, or turnover tax number. You need it for filing your VAT return and paying VAT in the Netherlands. You receive a VAT number automatically when you register your business with KVK – that is, if the Tax Administration deems you to be an entrepreneur for VAT purposes. They take this decision based on the information you provide when you register at KVK. If your business is based abroad, but has to pay VAT in the Netherlands, you need to register with the Tax Administration.