Foreign investors who want to open a company in the Netherlands have a wide range of legal entities to choose from. These legal entities offer various advantages, some of them related to the ease of incorporation, others to the founder’s liability and some in respect to the minimum share capital. Before deciding to invest in the Netherlands, entrepreneurs should know what type of company is best suited for their specific business needs as well as the different requirements that apply.
Our attorneys in the Netherlands can provide a preliminary assessment of your business and help you take the most suitable choice.
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Types of structures in the Netherlands
The five types of legal entities that can be set up in the Netherlands are:
- general partnership (VoF): where the partners bear full liability for the business but it has no minimum start-up capital requirements.
- limited partnership (CV): based on the relationship between a founder who is fully liable and a financial supporter who becomes a partner (without limited liability).
- professional partnership: each partner makes a contribution and it is usually formed by professionals such as architects, dentists, or lawyers.
- private limited company (BV): the most widely spread corporate form, it does not require a minimum share capital but an initial deposit, with a low value.
- public limited company (NV): suited for larger businesses mainly because the minimum share capital is substantial.
Investors should note that although there is no requirement for an initial capital for the partnerships, none of them has legal personality. At least two partners are required to form a general partnership, limited partnership or professional partnership.
The difference between the BV and the NV lies mainly in the minimum share capital. This can be an important distinction that may determine investors to choose the BV over the NV. One of Dutch lawyers can give investors more details on these two specific business forms.
Minimum share capital required in the Netherlands
The minimum share capital required to open a Dutch company differs according to the type of company that is incorporated. For the companies with no legal personality, the partnerships, no minimum share capital is required.
A minimum paid share capital of 0.01 euros, which is considered the nominal deposit (made in cash or in kind), is required for the private limited company. This is the most popular form of legal entity in the Netherlands.
Public limited companies in the Netherlands require a minimum subscribed capital and minimum paid-up capital of 45,000 euros.
The difference between the BV and the NV does not rely solely in the minimum capital but also in the types of shares. For the NV, at least 20% of the authorized capital must be paid up at the time of the incorporation and the minimum amount is the one mentioned above, 45,000 euros. The NV can have both registered shares and bearer shares and the latter are freely transferable. The NV can issue share certificates. For the BV, the shares can be transferred by means of a deed of transfer and this is executed before a civil law notary.
When starting a business in the Netherlands, entrepreneurs need not only to prepare the required minimum capital but will also need to open a business account with a Dutch bank. The minimum required amount for opening the chosen business will be deposited there. Account holders in the Single Euro Payment Area can make national and cross-border payments once this account is set up.
Other expenses related to company formation and management in the Netherlands
Other taxes for companies in the Netherlands include the corporate income tax, which has a progressive rate: 20% for taxable income up to 200,000 euros and 25% for taxable income above 200,000 euros. A capital duty of 0, 55% is levied when the necessary capital is submitted for the formation of a company and afterwards for any increase in the company’s capital.
Other taxes and fees will be necessary upon incorporation, not only the minimum share capital. They can be related to the notary fees, the actual fees for registration with the Dutch Chamber of Commerce and any other fees as applicable to those investors who request specialized incorporation services.
Below, our team of lawyers in the Netherlands lists the main steps that need to be taken into consideration when starting a business, including paying the minimum share capital:
- Choose a business form: as previously states, there are a number of business forms and each requires a different minimum share capital.
- Choose a trade name: the company will need to have a trade name that is unique and does not infringe others.
- Register the company: this is the actual registration phase, with the Commercial Register and the Tax Administration.
- Register for social security: for those investors who plan on hiring staff, they need to register as an employer.
- Open the bank account: this can be done before registration when proof of capital payment is required (for selected business forms).
- Post-registration steps: these may include applying for other different types of business permits and special licenses for functioning.
Considering the minimum share capital is just one of the relevant steps when opening a company in the Netherlands. When choosing the most suitable business form, investors are advised to consider the implications of the unlimited liability that comes with some of the business forms that do not require a minimum incorporation capital, such as the partnerships or the sole trader. While the overall costs for incorporation may be reduced in these cases, the founders will be fully liable for the debts and obligations of the business as they are not legal entities and there is no distinction between the founder and the business. This is why the private limited liability company, the BV, is often the preferred business choice for many investors. Not only does it not required a substantial minimum share capital but it only demands a small initial deposit that is affordable for all investors.
The minimum share capital is part of the start-up costs when opening a Dutch business. Investors who wish to know more about the requirements, and how to open a bank account, can reach out to one of our lawyers.
The incorporation procedure for Dutch private limited companies and public limited companies required the presence of a notary. Our law firm in the Netherlands can provide complete company incorporation services.