Are you planning to start a business in the Netherlands?
Entrepreneurs who are planning to expand into Europe often discover that the Netherlands is an attractive and accessible place to start doing business. Establishing a company in the Netherlands is generally straightforward, especially if you choose a clear legal structure and involve a corporate law specialist at an early stage. With the right legal support, setting up a Dutch company can be arranged efficiently, allowing you to focus on growing your business rather than on administrative hurdles.
The Dutch BV: the most commonly used legal form
For most business owners, the preferred legal form in the Netherlands is the Dutch private limited company, known in Dutch as the “besloten vennootschap met beperkte aansprakelijkheid” or “BV”. This legal entity has its own rights and obligations and operates independently from the individuals behind it. Contracts with customers, suppliers, employees and business partners are entered into by the BV itself, not by the shareholder in a personal capacity. The company can be formed by a single founder or by multiple founders, who will usually also be the initial shareholders.
Who can establish and own a Dutch BV?
Both natural persons (individuals) and legal entities (such as other companies) can act as incorporators and shareholders of a BV. There is no requirement that shareholders must be resident or established in the Netherlands. Foreign individuals and foreign companies can therefore set up and hold shares in a Dutch BV without needing a separate local partner. This makes the BV an appealing vehicle for international entrepreneurs, investors, holding structures and cross‑border business operations.
Company name, registration and statutory seat
The company name must include the designation “B.V.” so that it is clear to third parties that they are dealing with a private limited company. In addition, the BV must be registered in the Dutch trade register maintained by the Chamber of Commerce. The statutory seat – the official corporate seat described in the articles of association – must be located in the Netherlands. In practice, many entrepreneurs use a BV as their operating company from which day‑to‑day commercial activities are carried out. It is also common to implement a holding structure, where a holding BV owns the shares in one or more operating BVs. Such a structure can offer advantages for risk management, asset protection and tax planning.
Operating companies and holding structures
Every BV has a corporate purpose that is recorded in its articles of association. This purpose clause describes the activities that the company may carry out. Dutch corporate law gives considerable flexibility here: almost any lawful business activity can be included, provided that it does not conflict with public order or morality. Within this framework, a BV can generate profits by entering into a wide range of business arrangements, such as sales and purchase agreements, service agreements, distribution and agency contracts, cooperation agreements, partnerships and joint ventures. As a result, the BV is suitable for many different types of enterprises, from start‑ups and scale‑ups to established family businesses and international groups.
Share capital and payment obligations
The capital of a BV is divided into one or more shares. Modern Dutch company law no longer requires a substantial minimum share capital for incorporation. In fact, a BV can be formed with a very low issued capital, for example EUR 0.01. It is also possible that the share capital is not fully paid up at the time of incorporation. The shareholders may agree that the unpaid part will be paid to the BV at a later stage, when the company requests it. Until that contribution has been made, the obligation to pay up the remaining amount on those shares generally continues to exist.
Flexible share classes and shareholder rights
Shares in a BV can carry different rights, which allows for a tailor‑made capital structure that fits the business strategy and investment needs of the company. The most important rights linked to shares are the right to vote in the general meeting of shareholders and the right to share in the profits of the company through dividend distributions. Dutch law gives room to limit or exclude certain rights in the articles of association. For example, it is possible to create non‑voting shares, which do entitle the holder to dividends but not to voting rights, or non‑profit shares, which carry voting rights but no entitlement to distributions. However, a single share cannot be deprived of both voting and profit rights at the same time; at least one of these core rights must remain attached to each share. This flexibility is valuable when structuring investments, employee participation schemes, family business succession or joint ventures.
Limited liability as a key advantage of the BV
One of the main reasons entrepreneurs choose a BV as their legal form is the principle of limited liability. As a starting point, shareholders are only liable up to the amount they have invested in the company or have committed to pay on their shares. The debts and obligations of the BV are in principle confined to the assets of the BV itself. The private assets of the shareholders are generally shielded from claims by business creditors, except in specific situations where different rules apply, for example in cases of serious misconduct by directors or personal guarantees. This separation between private wealth and business risk is a key feature of the Dutch private limited company and a crucial element in professional risk management for entrepreneurs.
A solid legal foundation for doing business in the Netherlands
For business owners who are considering doing business in the Netherlands, setting up a BV therefore offers a combination of flexibility, legal certainty and limited liability. By choosing the right corporate structure, carefully drafting the articles of association and designing an appropriate share class structure, entrepreneurs can create a solid legal foundation for their Dutch activities. If you are exploring company formation in the Netherlands, or if you want to optimise an existing structure, it is advisable to seek specialised legal advice from a corporate law team experienced in assisting entrepreneurs and companies with Dutch BV incorporations and cross‑border business structures.
Questions?
Do you have any questions about this article or other legal questions? Our specialised lawyers will be happy to assist you. You can reach us by email, telephone or via the contact form.
