Legal Information in the Netherlands

Forms of business

There are several ways to operate a business or to render services in the Netherlands. There are corporate entities and non-corporate entities.

Corporate entities:

2 types of limited liability corporate entities are recognised: the B.V. ( besloten vennootschap) and N.V. ( naamloze vennootschap).
Both the B.V. ( private limited liability company) and the N.V.( public limited liability company) are entities with legal personality and its capital is divided in shares. The B.V. is the more flexible and is most frequently used in international business.
The cooperative ( Co-op): mostly used as a holding company in international structures. The Co-op is a special sort of association with legal personality. The participants are called members and a minimum of 2 members is required. Members can be individuals, partnerships or legal entities.

Non-corporate entities:

Partnerships: used by individuals and entities to work together without incorporating a separate legal entity. Only a partnership agreement is needed. The partnership can not hold legal title but has rights and assume obligations in her own name.
Branch: A branch is not a separate legal entity but an establishment in the Netherlands which is part of and is governed by a foreign legal entity. The parent always bears the ultimate legal responsibility and liability for the branch. Depending on the nature and scope of the activities, the branch may qualify as a “permanent establishment” for tax purposes.
Foreign companies often start their activities abroad in the (legal) form of a branch or B.V. Obvious advantages of a branch are that you do not need to set up and incorporate a legal entity.
An obvious disadvantage might be that the branch imposes a liability on the parent, while a separate legal entity does not. The specific circumstances and/or tax situation dictate the a form of business.

Incorporation limited liability company (B.V.)(1)

For the incorporation of a limited liability company, the assistance of a notary is necessary.
The notary will draft 1. (straightforward) articles of association (in Dutch and an unofficial English version), 2. the required power of attorney and 3. the personal data cards (required for the registration of the director(s) with Dutch Chamber of Commerce).
The founder(s)/shareholder(s) must sign the required PoA. With respect to the legalization of the signature(s) please note that:

a readable copy of a valid passport of the signing person(s) must be provided;
the signature of the undersigning persons has to be legalised by a civil law notary or public notary;
the signature of the civil law notary or public notary has to be apostilled (only if the civil law notary is not Dutch).

The notary needs to following Information:

the name of the newco;
the shareholder(s) of the newco;
statutory seat and address;
copy of the passports of the statutory director(s) and addresses;
if the director(s) is/are jointly or independently authorized to represent the newco.

After the PoA has been signed, the newco can be incorporated by the notary at short notice. The notary will register the company with the Dutch Chamber of Commerce.

Incorporation limited liability company (B.V.)(2)

Issued share capital

In the Netherlands, there is no legal obligation to increase the value of the issued shares capital upon incorporation of the private limited liability company in view of the level of expected revenue. From a legal point of view, an issued shares capital of one or two € 1 shares is sufficient or, for instance, 100 shares of € 0,01. From a commercial point of view however, it might be interesting to have a higher level of issued shares capital, as the issued shares capital will be mentioned in the Chamber of Commerce. Potential trading parties may have interest in this information before they decide to do business.

Documents

The founder(s)/shareholder(s) must sign the required PoA. With respect to the legalisation of the signature(s) please note that:

a readable copy of a valid passport of the signing person(s) must be provided;
the signature of the undersigning persons has to be legalised by a civil law notary or public notary;
the signature of the civil law notary or public notary has to be apostilled (only if the civil law notary is not Dutch).
This is an obligation arising from the Apostille Convention of 5 October 1961.

The following documents/information are needed:

the name and description of activities of the newco;
the shareholder(s) of the newco;
statutory seat and address;
a copy of the passports of the statutory director(s) and addresses;
if the director(s) is/are jointly or independently authorized to represent the newco;
a UBO –statement and Structure Chart.

Address

For the establishment of a Dutch limited liability company it is required that the new co has an address in the Netherlands. This must be an address where others could visit the company. Therefore, you can not use a PO box as a business address for your company. From the address on which the company will be located, you must hand over a rental agreement or a declaration of consent. The notary must add a copy of this when registering the company with the Chamber of Commerce.

Incorporation limited liability company (B.V.)(3)

Ultimate Beneficial Owner (UBO)

For the incorporation of a limited liability company on behalf of a foreign legal entity, the notary needs an UBO-Statement and a Structure Chart of your company structure. The UBO must declare that he / she holds the ultimate economic rights of the founding foreign entity. If there are several UBOs, they must each declare separately to each other that they are entitled to a share of the profits of the company or parent structure. The notary must know who is exactly behind the foreign entity and the possible holdings above it.

“A UBO” is:

a natural person who holds an interest of more than 25% of the capital interest – or who can exercise over 25% of the voting rights at the Shareholders’ Meeting of a legal entity other than a foundation or trust or who can actually exercise control of this legal entity in some other way, unless this legal entity is a listed company; or
if a foundation or trust holds more than 25% of the capital interest – or can exercise over 25% of the voting rights at the Shareholders’ Meeting of a legal entity other than a foundation or trust – or can actually exercise control of this legal entity in some other way:
a beneficial owner of 25% or more of the assets of a foundation or trust or the party who has special control over 25% or more of the assets of a foundation or trust.”

VAT compliance and Fiscal representation

When a foreign company acquires goods or performs supplies in(to) or from The Netherlands these often trigger an obligation to register for a Dutch VAT purposes. The registration involves the obligation to submit Dutch VAT returns, European Sales Listings and or Intrastat returns.
The foreign entity can register for VAT purposes itself and submit all returns or appoint an agent or fiscal representative to support him.
An agent or fiscal representative takes care of all Dutch compliance obligations of the foreign company.
For certain transactions a foreign company has an obligation to appoint a fiscal representative.

Voluntarily

Especially when the foreign company regularly imports products into the Netherlands, an appointment of a fiscal representative creates a cash flow advantage. The foreign company is then allowed to apply for an import VAT deferment license. When using this license no import VAT needs to be paid at the moment of import of the goods. The import VAT due can be reported in the Dutch VAT return and deducted in the same Dutch VAT return. On balance no import VAT is actually paid.

Compulsory

Fiscal representation is compulsory in the following situations:

A non-established party performing certain zero-rated supplies or purchases of goods in an
administrative VAT warehouse
A non-established party releasing goods from a VAT warehouse
A non-established party performing certain zero-rated supplies or purchases of goods in an
excise duty warehouse
A non-established party releasing goods from an excise duty warehouse
Parties from certain non-EU countries performing distance sales for which Dutch VAT is due

Immigration

No immigration requirements are applicable to EEA nationals.
In case the stay of an EEA national exceeds 4 month she/she needs to register with the local
municipality in the city of residence.
An employer needs to be in the possession of a work permit for a non EEA national.
In case the intended stay will exceed 90 days ( within a period of 180 days) a residence
permit is required to legally be allowed to stay in the Netherlands.

Procedure work permit non EEA nationals

There are various types of Dutch work permits (e.g. for intra-company transfers and trainees). It depends on the specific facts and circumstances which type of work permit can be applied for. For some non-EEA nationals a single application for a combined permit for work and stay (GVVA procedure) needs to be applied for in case they plan to work and stay in the Netherlands for at least three months. This procedure does not always apply; a number of exceptions exist. If the GVVA procedure does not apply, a separate MVV visa and residence permit should be applied for in addition to the work permit.

Highly skilled migrant procedure

A residence permit for a highly skilled migrant allows a non-EEA national to reside and work legally in the Netherlands (without a separate work permit). This procedure is, in general, applicable in case the employee stays longer than 90 days within a period of 180 days.
The following requirements have to be met:

The company must be registered as a recognised sponsor with the Dutch Immigration and Naturalisation Service (‘IND’);
The employee should have a gross monthly market conform salary of EUR 4,324 (EUR 4,669.20 including holiday pay, figure 2017) or EUR 3,170 (EUR 3,423.60 including holiday pay, figure 2017) if the employee is younger than 30 years

Further information & disclaimer

Further information
Levenbach Advocaten Mr. Aernout Zappey, Oranje Nassaulaan 17 (1075 AH) Amsterdam I: www.levenbach.nl T:+ 31 20 6646511 @: AernoutZappey@levenbach.nl
Disclaimer
Although Levenbach Advocaten has taken the greatest care in compiling the information contained in this brochure, it cannot guarantee that this information is correct, complete and up to date. Therefore Levenbach Advocaten accepts no responsibility for the completeness or accuracy of any of the information in this brochure and makes no representations about its suitability for any particular purpose. Levenbach Advocaten made every effort to ensure that the information in this brochure is accurate and comprehensive. However, the information is only intended as a basic guide to Dutch law, and does not address the complexities of particular circumstances. Levenbach Advocaten can therefore not accept liability for any direct or indirect damages arising from the use of the information contained in this brochure, including the inaccuracy of any information. No rights can be derived in any way from, and no claims can be brought in respect of, the contents of this brochure. Unless otherwise indicated, all rights, including authors’ rights and other intellectual property rights in respect of the brochure and the information contained therein are retained by Levenbach Advocaten.

Gepubliceerd May. 2022