Company Applications

If I incorporate a company in the Netherlands, am I limited in doing business outside Dutch borders?

No, a Dutch company is not limited to trade only in the Netherlands. Almost every Dutch corporate entity is allowed to participate in international trade. There are no huge trade barriers that would impede any corporate activity that fall within EU legislation. However, products like weapons, drugs, alcohol, tobacco need special import/export licenses.

How can I liquidate my German GmbH?

In order to liquidate your German GmbH you will need to engage the following process:

  1. Decision of the shareholders to liquidate
  2. Naming liquidator
  3. Notification to court that liquidation started
  4. Dividing money left
  5. Final declaration that all money and debts have been divided
  6. Letter to court asking to delete company from register

This is briefly the process that the entrepreneur has to go through when wanting to terminate a GmbH.

Netherlands

ACCOUNTING & COMPLIANCE

Is the registration of a Dutch company enough for the collection of donations and funds with local residents of the Netherlands?

Yes, it is sufficient. However, if you collect donations from local residents, please note that without ANBI status for the Foundation, the residents are not able to claim the gift as a credit on their income tax return. However in any case, the income will be tax free for the Foundation. Getting ANBI status is very complicated, and small donations, typically clients do not get a tax credit anyway if they do not meet the minimum gift of €60 EUR. So anything below €60 EUR, nobody gets a tax credit anyway.

Can I use a European company as re-invoicing company?

Yes, that is possible. The best way to do this is to incorporate the best type of company for re-invoicing (usually a private limited) in the country where you invoice most of your clients. If you use a Dutch company, solely to import goods and to deliver the goods in the rest of Europe (except for Netherlands) we suggest that you invest more efforts into creating more ‘substance’ in the Netherlands. Like opening your own warehouse in Netherlands, or employing agents or staff members.

What are the procedures and requirements of setting up a company in the Netherlands?

There are a lot of potential issues you will have to take into account when setting up a company in the Netherlands. Which legal entity best suits your needs, registration with the Chamber of Commerce (KvK) & the Dutch tax authority, residency permits, environmental regulations, selecting a company/trade name, registering employees are some of the examples that could prove rather difficult. In a lot of instances you will need to deliver several legal documents and explain your intended entrepreneurial activities. With the help of INCO Business Group, all of these potential issues will be taken care of, as we deal with these on a daily basis. The exact procedure could differ in each situation, and we will guide you through it at the best of our abilities.

What are royalties?

A royalty is a payment to an owner for the use of property, especially patents copyrighted works, franchises or natural resources. A royalty payment is made to the legal owner of the property, patent, copyrighted work or franchise by those who wish to make use of it for the purposes of generating revenue or other such desirable activities. In most cases, royalties are designed to compensate the owner for the asset’s use, and they are legally binding.

What are the steps I have to follow as a foreign investor?

To begin incorporation of your company in the Netherlands we will require the following things:

  • Your company name
  • The full name, date of birth, address and nationality of all directors
  • The full name and address of all shareholders
  • The company’s proposed business activities

What licenses do I need to obtain in order to operate legally in the Netherlands?

You just need a regular business license, which will be valid for most business activities in the Netherlands. It will be provided within 1 day after the company formation by the Chamber of Commerce. See INCO-kvk.pdf. Its included in our standard formation fee.

Is it possible to make our directors/shareholders anonymous to the public?

The chamber of commerce in the Netherlands is open for the public, which means that it is possible to acquire some basic information about the company like the identity the director and shareholder. This information will not be shown online instantly but you will have to create an account in order to download the extract. The shareholders of the Dutch NV can be fully anonymous. 

Please note that our secretary (local representative) will not be appointed as an actual director or shareholder and therefore will not show on the public register.

If your client wishes to to disclose as little personal information as possible we could appoint a nominee director and shareholder, however nominee services in the Netherlands are highly regulated which means extra compliance and costs. Another solution might be to appoint a Dutch Foundation (Stichting) or STAK (Stichting AdministratieKantoor) as a director and shareholder.

Does INCO help in opening a bank account?

Yes, we provide secretary service which includes the opening of a business bank account. The costs of secretary service package is €1.500 EUR.

How much time does it take to set up a company in the Netherlands?

Depending on the type of legal entity you choose, it ranges from 2 to 9 working days to set up a company in the Netherlands. This of course also depends on other legal authorities like the Chamber of Commerce and the Dutch Tax Authority and how fast certain documents are provided to us.

Setting up a Dutch company could take 5 to 10 working days, although we can also do it within 1-2 days if the shareholder visits our office, or if we receive the signed and legalized Power of Attorney back within 1 day.

Does the registration at the Chamber of Commerce imply any costs?

Yes it does. The Dutch Chamber of Commerce will charge a one-time fee of €50 EUR. They used to charge annual fees for the registration but this was revoked in 2013.  

What kind of bank card will we receive when opening a bank account in the Netherlands?

They will receive a Dutch debit-card provided by Maestro. They can also apply for a credit-card, like MasterCard (ING uses MasterCard) or American Express. But in some cases, a credit history is required. We can also apply for a prepaid credit card of Visa or MasterCard, and connect it to the company’s bank account.

What fees are not included in INCO’s standard Company Package?

 

  • Any courier charges: If we need to courier the documents to you, we will charge the actual courier charges plus a 15% handling fee.
  • Legalization fees: We will deliver the original company documents, however if you need an extra legalized set, or an apostille on the documents, extra fees will be applicable. For the Dutch bank this is not required)
  • The annual payment to the Dutch Chamber of Commerce (Kamer van Koophandel): You will receive the first invoice after approx. 1 week after registration of the company. The fees are € 50 EUR per year.
  • Banking fees: At the moment, no bank account opening fees are charged by the bank, but they will charge the company about 10-25 euro per month to maintain the account, depending on the type of account. Fees might vary per bank.

What is the procedure of setting up a Dutch company?

The exact procedure of the incorporation could differ regarding the corporate entity and urgency of the request. However, there is a standard procedure which can be roughly followed. Firstly, INCO will require the following documents and information to begin the process:

  • Passport copy of the chosen director or shareholder(s)
  • Proof of address (e.g. utility bill) of the director and shareholder
  • Complete order form
  • Invoice details (name and address)

In the event that the chosen shareholder is a legal entity, we will require:

  • Legalized Certificate of Good standing, or;
  • An extract from the Companies Registrar which identifies the neutral person who is authorized to sign the Memorandum of Association of the new Dutch BV

Once we have received these, we will send you the following documents:

  • Draft statutes
  • Personal data card
  • Power of Attorney
  • Invoice

If you are not visiting INCO at one of our offices, these documents need to be printed and signed at the public notary. You will then need to send us scanned copies for approval. As soon as we have approved these, we will need you to send us the originals by courier.

On receipt of the original signed documents, we will begin incorporation of your Dutch company and register it at the Chamber of Commerce in the Netherlands.

Upon successful incorporation, which will take a few days, INCO will send you scans of the company documents and an extract with your company’s registration number. With your registration number you will be able to apply for a Dutch business bank account.

Before you decide to use the BV, which is the most common private limited company within the Netherlands, INCO could also help you consider other legal entities. The Dutch Partnership or Dutch Foundation being two examples.

What licenses do I need to obtain in order to operate legally in the Netherlands?

You just need a regular business license which will be valid for most business activities. It will be provided within 1 day after the company formation by the Chamber of Commerce. See: INCO-kvk.pdf. This is also included in our standard formation fee.

Do I need to deposit share capital when I incorporate a Dutch BV?

Yes, you need to pay the share capital if the share capital is more then €100 EUR . If it is lower then that amount, the notary usually assumes that the company has adequate funds.

In order to pay up the share capital you need to transfer the funds to the bank account of the company.

COMPANY FORMATION NETHERLANDS

DUTCH BV

What is a Dutch B.V. (Besloten Vennootschap)?

A Dutch B.V. can be compared to a Private Limited Company which is used in many other countries all over the globe. Some characteristics of the Dutch B.V. are:

  • A Dutch B.V. has a legal personality with a share capital divided into a minimum of one share.
  • The shares (along with voting rights) must be issued to an individual or a legal personality (private limited company).
  • It is possible to appoint a single, non-resident individual or corporate entity as the director or shareholder, making the Dutch B.V. a very flexible entity.
  • The shares of a Dutch B.V. are usually not freely transferable due to transfer restrictions by law or restrictions set out in the articles of association.
  • Shareholders of a Dutch B.V. are not personally liable for losses of the company in excess of the amount which must be paid into shares.

What is the minimum amount of required share capital to set up a Dutch B.V.?

The minimum amount of share capital is €0,01 EUR since 2012. Before 2012, it used to be €18.000 EUR, but this has fortunately changed and thus made the Netherlands a very interesting country for doing business because it is relatively cheap to form a company here.

What are the advantages of a Dutch B.V.?

The Dutch B.V. is the legal entity that is used most often in the Netherlands. This is because it’s fairly cheap to set one up and the shareholders have limited liability, meaning that if the company would go bankrupt, the shareholders are not liable for their personal assets and could only lose their investments in the Dutch B.V.

Can a director be an employee of the Dutch B.V. and the main shareholder at the same time?

Yes, according to Dutch corporate law it’s perfectly fine and there are no direct limitations.

Can a Dutch B.V. have shares which do not have profit- or voting rights?

Yes, there is a possibility to divide these rights. However, a share has either a profit or a voting right, it cannot have no rights at all. The division of these rights could be through a STAK (stichting administratiekantoor). This form of legal business structure is actually a different version of the Dutch Foundation. Basically, it is a foundation that owns one or more Dutch BV’s. This could sound contradicting because a Dutch Foundation are not permitted to make any profit (not more than €15.000 EUR annually). However, the STAK is only the owner of the legal rights of the shares. This means that the STAK has voting- and/or board rights within the B.V., but do not have any economic rights. These economic rights are handed out in the form of profit receipts. The STAK is only the owner of these shares, but do not have any economic interest.

The reason a STAK could be beneficial lies within the option to divide the legal and economic rights of a B.V.’s shares. The legal rights of the shares are difficult to trade, but the economic rights of the shares can be easily traded without the involvement of a notary. This kind of flexibility will reduce costs and the right holders remain anonymous to the outside world.

Do I have to pay share capital anywhere in the formation process?

Yes, you need to pay up the share capital if the share capital is more than €100 EUR (if lower than that amount, the notary usually assumes that the company has enough funds). In order to pay up the share capital you need to transfer the funds to the bank account of the company, using the payment description ‘ capital deposit’  and send us a scan of the bank statement.

Do I need to deposit share capital when I incorporate a Dutch BV?

Yes, you need to pay the share capital if the share capital is more then €100 EUR . If it is lower then that amount, the notary usually assumes that the company has adequate funds.

In order to pay up the share capital you need to transfer the funds to the bank account of the company.

DUTCH COOPERATIVE

What is a Dutch cooperative?

The Dutch cooperative is a legal entity which involves numerous members who work under the same name. Much like the Dutch C.V., everything can be set in a formal agreement between the members of this cooperative. For example, they can choose to share profits among members or each member can keep the profits they make themselves. A member can be an individual or a company in itself. The Dutch Cooperative could be useful if you want to partner up with someone else under the same brand name.

What is the formation procedure of a Dutch cooperative?

A cooperative is formed by the means of a notarial deed and a multilateral legal act. This means that a cooperative is formed by two or more natural persons or legal entities. The deed must be executed in the Dutch language and the articles of association must cover several topics:

  • The name of the cooperative
  • The municipality where the cooperative has its seat
  • The objects of the cooperative
  • The obligation of the members towards the cooperative, or the manner in which these can be imposed
  • The manner in which the general meeting of the members is convened
  • The manner in which the directors are appointed and dismissed
  • The manner in which the credit balance of the cooperation will be applied in the case of dissolution or the manner in which the application will be determined.

DUTCH CV

What is a Dutch CV?

A Dutch CV (Commanditaire Vennootschap) is actually not an official legal entity according to Dutch corporate law, but is constituted by execution of a Partnership Agreement parties, of which at least one is a General Partner and at least one is a Limited Partner. Due to the nature of a CV, regarding that it is only a Partnership, it does not have its own separate legal personality. Because it is not regarded as a legal entity, it cannot have assets, as these are legally and jointly owned by the General Partners.

Does the creation of a Dutch CV require governmental approval?

No, it does not. Current Dutch legislation does not state that governmental approval is needed for the valid establishment of a CV.

What is a General Partner within the CV?

The General Partner(s) are responsible for the management of the CV and for the day-to-day operations of the CV. Each General Partner shall have authority to individually represent and bind the CV, unless the Partnership Agreement provides otherwise. If a division of tasks and duties is not among the General Partners, each General Partner shall be held equally liable for the liabilities of the CV.

What is a Limited Partner within the CV?

The Limited Partner(s) are only allowed to interfere with the internal policy of the CV. It is strictly forbidden for Limited Partners to perform any act which may be considered to be an act of (external) management. If a Limited Partner acts within these boundaries, their liability is restricted up to their (capital) contribution. If they fail to do so, they will become liable on an equal basis as the General Partners.

Do shareholders exist in a CV?

No, there are no shareholder within the CV. You could compare the position of the Limited Partner to a shareholder to a certain extent. The General Partner could be compared to the position of a trustee acting on the behalf of the CV.

What is a closed CV?

A CV can be regarded ‘closed’ when any of the partners cannot be replaced unless unanimously agreed upon by all Partners. A closed CV is considered to be transparent from the Dutch fiscal point of view. This means that in the event that the CV conducts no activities in the Netherlands and has no assets in the Netherlands, nothing will happen. There are also hardly any tax compliance conditions that have to be met in this case. Contrary to this, in the event that the CV conducts activities in the Netherlands or holds Dutch assets the Partners of the CV will become taxable in the Netherlands for corporate or personal income tax. In some cases the levying of taxation is prohibited by treaty law.

What is an open CV?

A CV is automatically open if it does not meet the closed CV criteria mentioned in the Q&A above. An open CV in the Netherlands is treated as a non-transparent entity. This means that the CV is not only a fully taxable entity for the levying of corporate income tax in the Netherlands, but is also taxable on its worldwide income. Practically speaking, tax treaties and unilateral agreements normally prohibit taxation on worldwide income. Moreover, dividend payments made by an open CV to its partners are taxable with Dutch withholding tax (except where the EU Parent-Subsidiary Directive or certain treaties apply).

The partners of the open CV are not taxable for their interest in the CV. For partners that do not reside in the Netherlands, any capital gains generated by them, should not be taxed in the Netherlands. There is however, one exception to this rule, which is based on anti-abuse legislation, but the cases where this rule is applicable are very rare. This rule can never be applicable in treaty cases.

DUTCH FOUNDATION

What is a Dutch Foundation?

A Dutch Foundation (Stichting) is a corporate entity with limited liability but unlike a Private Limited, it has no shareholders or share capital.

Not having any shareholders means it offers a degree of anonymity to the ultimate beneficial owners (UBO) of the entity. This means that any party involved in the foundation, apart from the foundation’s board of directors, remain undisclosed. (Note: the source of funds and any underlying parties involved will need to be disclosed to the Dutch Central Bank).

Dutch case law has established that a Dutch Foundation will not be subject to corporate income tax/VAT in situations where they are considered to be solely a holding foundation. Itself may not make any profit, or at least not more than €15.000 EUR per year.

Profit receipts can be issued to investors or shareholders, which allows them to take profits, but without getting any voting rights. In effect, the legal ownership is separated from the economic ownership. As it is considered a ‘legal person’, a foundation can be used as the top entity in a group structure and be recognized as the UBO of the structure.

What are the advantages of the Dutch Foundation?

The Foundation is a self-owning entity (until it decides to issue profit certificates), so the owners are fully protected, and in most cases do not even have to be disclosed (in their local tax return, etc.). Some characteristics and/or advantages of the Foundation are:

  • Profit receipts can be issued to investors or shareholders, which allows them to take profits, but without getting any voting rights. In effect, the legal ownership is separated from the economic ownership. Multinationals prefer this setup, in order to prevent hostile takeovers, and put more power at the level of the board of directors. For tax purposes, profit certificate holders are typically treated equally as shareholders. It is not required to issue profit certificates at formation; this can be done later. Please note that only profit certificates can be issued if there is also a Dutch B.V. as a subsidiary of the foundation. In effect, the foundation will be the legal owner, while it ‘transfers’ the economic ownership by issuing profits certificates. We call this setup the ‘STAK’ (Stichting Administratiekantoor).
  • It does not require tax registration in the Netherlands if it is only involved in passive investments owning real estate, stocks, shares, etc.
  • The foundation requires only one director, which can be a non-resident corporate entity.
  • It can voluntarily register for taxes, when it becomes ‘operational’. Even if it becomes operational, it’s not required to register for taxes (or pay taxes) as long at the profits do not exceed €15.000 EUR per year.
  • It has no formal UBO’s, so when opening a bank account in Netherlands, no UBO’s have to be declared (unless profit certificates have been issued, in that case the holders will be considered UBO’s if they hold more than 25% of the capital).
  • The foundation is considered to be an ideal option as a ‘conduit company’, for re-invoicing (royalties, import, export etc.) Since it will not generate any profits in that case, it does not require any tax registration (note: it will not be possible to utilize tax treaties as well).
  • In case of death, or similar events, there will be no taxable event, because the ‘next of kin’ will be appointed as new board members, but there will be no transition of assets (instantly).
  • In case of divorce, the assets of the foundation (owner) will be protected. In case profit receipts/certificates are issued, they are considered the same as ‘shares’ and are assets that can be seized.

Can funds from the foundation be transferred to low/middle income countries in the form of projects or grants?

Yes, there are no direct limitations for the transferal of funds. However, funds cannot be sent to ‘beneficial owners’ of the company, unless they have a certain right to these profits.

What is a STAK?

A STAK (Stichting Administratiekantoor) is a form of legal business structure is actually a different version of the Dutch Foundation. Basically, it is a foundation that owns one or more Dutch B.V.’s (private limited). This sounds contradicting because a Dutch Foundation may not make any profit (not more than €15.000 EUR annually). However, the STAK is only the owner of the legal rights of the shares. This means that the STAK has voting- and/or board rights within the B.V., but do not have any economic rights. These economic rights are handed out in the form of profit receipts. The STAK is only the owner of these shares, but do not have any economic interest.

Can a STAK only be used for Dutch B.V.’s or could it also be used for foreign private limited companies?

The Dutch Foundation can be used for any foreign private limited company with shares as long as it fits within the requirements of the STAK.

Can you add a non-resident director to the foundation and still have full foundation status?

Yes, you can appoint non-resident directors to the Foundation without any direct limitations.

DUTCH NV

What is the Dutch N.V.?

The Dutch N.V. (public limited) is similar to the Dutch B.V. (private limited) because the company is also owned by shareholders. However the company’s shares are not registered to certain owners, so that they may be traded on the public stock market. The phrase literally means “nameless partnership” or “anonymous venture” and comes from the fact that the shareholders are not directly known. This is in contrast to the Dutch B.V. Moreover, the minimum start capital for the Dutch NV is much higher, namely €45.000 EUR. The shareholders are not personally liable for the liabilities of the firm.

What are the advantages of the Dutch N.V.?

The main advantage of the Dutch NV is that it enables you to trade your shares on the stock market. Secondly, this type of corporate entity enables the shareholder to remain unknown to the public.

DUTCH SOLE TRADER

What is a Sole Trader?

The Sole Trader is a type of business entity that is owned and run by one natural person and in which there is no legal distinction between the owner and the business. The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc.

What are the advantages of a Sole Trader?

The license for a sole proprietary business entitles the owner to hire employees and enlist the services of independent consultants. Although an employee or consultant may be requested by the owner to complete a specific project or participate in the company’s decision-making process, their contribution to the project or decision is considered a recommendation under the law.

GENERAL

How much time does it take to set up a company in the Netherlands?

Depending on the type of legal entity you choose, it ranges from 2-4 working days to set up a company in the Netherlands. This, of course, also depends on other legal authorities like the Chamber of Commerce, the notary and the Dutch Tax Authority and the matter of how fast certain documents are provided to us.

What is the minimum amount of members or chairpersons that are required for the registration?

The minimum amount of members or chairpersons required is just one. Although there are three ‘titles’ namely the chairman, secretary and treasurer. One person can hold all three titles.

Can I be part (member or chairperson) of two different dutch foundations?

Yes, that is no problem. There are no limitations according to Dutch corporate law.

What is a Power of Attorney (POA)?

A power of attorney (POA) is a written authorization to represent or act on another’s behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is named the principal, grantor, or donor (of the power).

What is an UBO?

UBO stands for Ultimate Beneficial Owner and is determined for companies to prevent money laundering and financially supporting terrorism. A beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. Moreover, it includes those persons who exercise ultimate effective control over a legal person or arrangement.

LEGAL

How inco will help you start your business legally?

INCO Business Group have developed a unique Ambassadors program for partnering up with lawyers, accountants and other corporate service professionals. Together we leverage each other’s specialties to grow our business.

What kind of license do I need to obtain in order to operate legally in the Netherlands?

You just need a regular business license, which will be valid for most business activities. It will be provided within 1 day after the company formation by the Chamber of Commerce, see: INCO-kvk.pdf. This is also included in our standard formation fee.

TAXES

If my foundation is not registered with the tax authority, do I need any form of accounting?

When the Foundation is tax registered then it will have bookkeeping requirements. It needs to be tax registered when it has more than €15.000 EUR per year in operational activities. In case of passive income (owning real estate, stocks, shares, etc.), it can be tax free, but in some cases it will still be tax registered in order to be able to apply tax treaties. For example the tax credits on dividends, because it can occur that the Foundation is not considered an active business.

Regarding royalties, is it possible to reinvest the company’s profits through loans?

Traditionally, there would be sub-licensing rights in the Netherlands, and the main intellectual property would be based in a low tax country, like Curacao, Dubai, etc. This setup was also called the ‘Dutch Sandwich’.

Nowadays, ‘conduit’ structures like this are becoming more scrutinized, and substance requirements are becoming more strict.

Reinvesting the company’ profits can only be done after the corporate tax has been paid.

In case there is a company, say in Dubai, who is focused on marketing or development activities for the Dutch company, such expenses would be deductible in The Netherlands. Only in case of Intellectual Property which is developed in Netherlands (mainly tech-companies) can apply for a tax ruling on income from innovation.

What would be the tax rate for dividends and royalty payments if the dividends are issued abroad?

Outgoing royalties are not taxed with any withholding tax. The tax treaty with the between any country and the Netherlands determines the withholding tax rate (most of the time 15%). To avoid tax liability on dividends, it is possible to incorporate a Dutch Cooperative which has no tax liability on dividends. The condition is that the Cooperative has at least 2 members.

What are the tax rules for a holding company in the Netherlands?

There is only withholding tax if you send dividend outside of Europe. The standard rate is 15% but it could differ as it depends on the country’s tax treaties with the Netherlands.