The Dutch General Partnership, also known as VOF, is another type of company established in the Netherlands formed by at least two members, through a contract registered at the Chamber of Commerce (Trade Register). This type of partnership is usually translated into “company with partners”.
Table of Contents
Procedure for opening a VOF in Netherlands
It is mandatory to register the VOF in the Business Register at the Netherlands Chamber of Commerce (KVK). This registration is essential to make your business official and legal.
| Quick Facts | |
|---|---|
| Who can open a VOF in Netherlands |
Two or more business partners; Non-EU citizens must have a residence or work permit. |
|
Minimum shared capital |
Not required |
|
Liability |
Partners are liable for any debts of the partnership. |
| Advantages of a general partnership |
– tax benefits and incentives, – ease of formation, – flexible management, – no minimum capital required, etc. |
| Registering the VOF |
At the Netherlands Chamber of Commerce KVK (Kamer van Koophandel). Our lawyers will assist with the registration. |
| Partnership agreement (vennootschapscontract) – characteristics |
Covers: – the VOF’s name, – business purpose, – partner contributions, – profit distribution, – power allocation, etc. |
| Is partnership agreement mandatory (YES/NO) |
NO, but highly recommended. It is advised to be drafted by a legal adviser, such as our Dutch attorneys. |
| VOF taxation |
– income tax, – VAT, – social security contributions, – payroll taxes, etc. |
| Employment income tax rate in Netherlands |
Progressive rates, from 9.32% to 49.50% of annual income |
| VAT registration |
Mandatory is engaging in taxable goods/services, unless qualified for the KOR (small business scheme). |
| VAT rates |
– 21% (standard); – 9%, 0% (reduced) |
| Filing financial statements |
Foreign partners must file the financial statements with the KVK. |
| Tax benefits and exemptions |
– entrepreneur allowance (ondernemersaftrek), – investment allowance (investeringsaftrek), – tax-deferred retirement reserve (fiscale oudedagsvoorziening). |
| Husband-and-wife VOF |
If the Tax Administration recognizes both partners as self-employed, they might receive double tax breaks. |
| Assistance |
Our Dutch law firm can offer more details about the VOF. We also assist with drafting the partnership agreement. |
It’s also important to create a partnership agreement, which is a document where partners outline how the business will run. This agreement will cover who has what powers, how profits will be shared, and other key details. The agreement can be written by the partners, but it is advisable to reach out to our lawyers in Netherlands for additional help. Please note that the agreement is not mandatory, but recommended.
Additionally, partners will have to pay the registration fee when opening a VOF company in Netherlands.
Partners also have the legal obligation to maintain accurate records of their business activities.
Characteristics of a General Partnership (VOF) in the Netherlands
Each partner must bring something to the respective business, like money, goods, knowledge or labor. Unlike other types of companies opened in Netherlands, for a VOF Company there is no minimum amount of capital required in order to start the company.
Another important aspect of the VOF Company in the Netherlands is that the implicated entities in the business are liable for debts, even if they were created by the other partner involved in the Dutch General Partnership. Therefore, a partnership agreement should be created and signed with a notary.
In regards to taxes, the partnership agreement should be registered at the Chamber of Commerce, and each partner will pay an income tax on their own share of profits, being treated as an independent entrepreneur. In this way, the partners have their own tax allowances and deductions.
Liability for a General Partnership in the Netherlands
When it comes to liability, the VOF partners are jointly and severally liable for the obligations of the VOF, meaning that if the assets owned by this partnership are not sufficient, creditors are entitled to claim the personal assets of the partners.
If the partnership is between husband and wife, then creditors can also claim your spouse’s goods, unless a marriage settlement has been made. In that case, the personal assets of the respective partner fall outside of the area of business.
As for taxes, in a husband-wife business, they can both claim tax allowances, but they will be obligated to perform tasks equally. VAT registration in Netherlands may not be requied for this business form, depending on the activities.
In regards to accounts and records, the law stipulates that any person doing business or having an independent profession has the obligation of keeping accounts and records of their financial position, and to retain books, documents and other data carriers that belong to those accounts and records. Each partner is required to compile a balance sheet and an income statement each year.
Record-keeping requirements
As mentioned above, you have a legal obligation to maintain thorough business records if you open a general partnership in Netherlands. Bookkeeping involves documenting both expenses and the income received. Tax returns are based on the information provided in these records. If all managing partners in the general partnership are foreign, the annual accounts must be submitted to the KVK. A Dutch tax calculator can be helpful in managing the financial aspects of your general partnership in the Netherlands.
If your VOF company in Netherlands hires employees, you’re responsible for fulfilling certain obligations, including paying payroll taxes and social security contributions for your staff. When hiring an employee for the first time, you’re required to register as an employer with the Tax Administration.
Although it may sound complex, our law firm in Netherlands can assist with the record-keeping requirements.
The experts at our Dutch law firm invite you to watch a video about the VOF:
Ending the general partnership
The general partnership in Netherlands may end if a partner leaves the partnership agreement or passes away, unless there’s a survivorship or takeover clause in the partnership agreement. If dissolution occurs, the partnership must settle any outstanding debts and distribute each partner’s share in the partnership agreement. The liquidation process involves returning each partner’s investment and distributing any remaining assets among the partners based on their share in the VOF’s profits. In situations where there isn’t enough cash in the partnership to cover outstanding debts, partners may be required to contribute additional funds proportionate to their share in the debt. Our attorneys in Netherlands can assist in liquidation cases.
Statistics about companies in Netherlands
Regarding the general partnership, our Dutch lawyers have gathered some general statistics about the business landscape in the country, as of January 1st, 2023:
- There were nearly 450,000 small and medium-sized enterprises (SMEs) in the Netherlands;
- Over 1 million companies were sole proprietorships;
- The business services sector in the Netherlands was the largest, with approximately 610,000 business enterprises;
- In contrast, the energy, water, and environment sector was the smallest, with approximately 9,000 business enterprises.
Aside from our company formation services, we also assist with VAT registration in Netherlands.
Contact our Dutch lawyers if you need assistance or more information regarding the VOF Company in the Netherlands.