If you want to do business in the Netherlands on a permanent basis and thus want to establish permanent offices there, you have to select a legal form for this office. You can choose between a branch office or a subsidiary.
A branch office is a permanent establishment of your company in the Netherlands. It is not a separate legal entity. Since it is not a separate legal entity, any company that establishes a branch office in the Netherlands is fully responsible and liable for all the activities of this branch office.
A subsidiary is a legal entity founded and established in the Netherlands in accordance with Dutch law. The (parent) company abroad is the legal owner of a subsidiary. It depends on the chosen legal form whether the foreign parent company is liable for the debts of the subsidiary. The right to profits and control are held by the foreign parent company/companies.
If you want to establish a subsidiary, you must choose its legal form. The legal forms used most often in the Netherlands will be discussed below.
The BV is a legal entity incorporated by means of a notarial deed. A BV can be founded by one (legal) person. A BV will issue shares to its founder(s) when it is incorporated. The founder will need to pay the (nominal) value of the shares to the BV. The shares usually entitle their holders to profits and control and will always be issued in their name. However, shares can also be created that only grant their holder control, or only grant their holder the right
to profits. This allows for the possibility to make specific agreements between the different shareholders.
In a BV, a person is only liable for the amount paid for the shares. By default, there must be at least a certain amount (e.g. € 0.01) of share capital. Dutch legislation includes the so-called directors’ liability. This liability only applies to directors and actual policy-makers (e.g. the Board) of the company in case of irresponsible conduct (see below).
The BV has the following bodies:
The NV is similar to the BV. The main difference is that an NV not only allows for registered shares but also bearer shares. An NV always requires a share capital of at least € 45.000.
All shares in an NV entitle their holders to profit and control.
A cooperative is an association incorporated specifically for the commercial interests of its members. It is always founded by means of a notarial deed and is a legal entity. The notarial deed contains the articles of incorporation. It does not require the deposit of a minimum capital. The members are responsible for the control of the cooperative. It also has a Board to carry out the policy and the daily affairs.
The liability of a cooperative can vary. The members can be fully, partially or not liable for the debts of the cooperative. This must be laid down in its articles of incorporation. The directors and the policy-makers also have directors’ liability.
In a sole proprietorship, the ownership, right to profits and control are held by one (legal) person, the owner. This may be the foreign parent company. A sole proprietorship is not a legal entity. The disadvantage of this form is that the liability for all debts of the sole proprietorship is borne directly and fully by the owner.
No (notarial) deed is required to incorporate a sole proprietorship. It also does not require a minimum capital.
The most important difference between a partnership and sole proprietorship is that there are more owners (partners). All partners are jointly and severally liable for all debts. It is advisable to record the mutual agreements well.
A CV is a special form of VOF. There are two types of owners in this form: managing partners and limited partners. The managing partners are jointly and severally liable for all debts of the CV. The limited partners are only liable for the amount they contribute to the CV. It is important to note that the limited partners cannot act on behalf of the limited partnership. If they do, they are automatically fully liable for all debts of the limited partnership.
A partnership closely resembles the VOF. Basically, the same rules apply, but in this form a participant can only be liable for his own shares of the debts of the partnership. A partnership can only be founded for the exercise of professions (such as doctors, lawyers, civil law notaries, farmers etc.).
A Joint Venture is solely a contractual form of cooperation in the Netherlands. It is not a legal form for a company. A Joint Venture is a contract concluded between different contract parties. These parties may be the foreign parent companies, but also legal entities incorporated by the foreign umbrella companies in the Netherlands.
In a legal entity, the owners are by default only liable for the debts to the amount of their contribution (BV and NV) or the amount captured in the articles of incorporation (cooperative). However, the directors and policy-makers can in case of mismanagement be held fully liable for all debts of the company. This principle thus deviates from the limited liability of a legal entity.