The Netherlands has several kinds of legal forms (rechtsvormen) for businesses. These structures can be divided into two groups:

Unincorporated business structures (Rechtvormen zonder rechtspersoonlijkheid)

These business structures are explored on this page.

Incorporated business structures (Rechtvormen met rechtspersoonlijkheid)

To find out more visit the legal form required page.

What is an unincorporated business structure?

An unincorporated business structure does not require a legal form such as a notarial deed. This means that you (and your private assets) are not protected from the debts of your business.

Unincorporated businesses can be set up directly at the Dutch Chamber of Commerce (KvK) without requiring the services of a civil law notary.

Tax and unincorporated businesses

The tax types that businesses with no legal form need to pay are BTW, income tax and payroll tax (if there are employees). There are also several attractive tax breaks available, see end of the page.

Unlike businesses with a legal form, unincorporated businesses do not pay corporation tax. Visit the page on setting up a business to learn more about business taxes.

Liability and unincorporated businesses

The main drawback of businesses with no legal form is that there is no distinction between your private and business property. If you run up debts in your company then the debtors are entitled to claim your personal assets. If your business goes bankrupt and you can't personally cover it then you also go bankrupt.

This also applies to any assets you share with a spouse - if you’re married under community property". To avoid such an eventuality you can always change your nuptial agreement.

Business structures with no legal form

The four unincorporated Dutch business structures are:
Eenmanszaak: sole trader
Vennootschap onder firma (VOF): general partnership
Maatschap: professional partnership
Commanditaire vennootschap (CV): limited partnership

Eenmanszaak: sole trader

Also known as a sole proprietorship, the structure of an eenmanszaak is exactly as its name states: a one person business.

This is a great structure for individuals who are starting up a business for themselves without partners or (substantial) investors. It’s quick and easy and offers several tax breaks in the first three to five years.

As a sole trader your business income and personal money are not required to be kept separate. This means that you can use your personal bank account to receive and pay invoices. It’s also important to note that sole traders can still employ personnel.

The eenmanszaak is particularly popular with freelancers (ZZP’ers) and small business owners. You can set up an eenmanszaak directly at the KvK. Visit the page on setting up your own business to see the KvK registration process.

The eenmanszaak in a nutshell:

Establishment: free (small KvK fee)
Capital required: none
Governance: owner
Liability: private 100%
Social security: no sickness or unemployment benefits
Taxation: BTW / Income tax / Payroll tax (for employees)
Tax breaks: yes if requirements are met

Eenmanszaak or BV?

Entrepreneurs are often undecided about choosing between an eenmanszaak and a BV (private limited company) when starting their business in the Netherlands. Both structures have different benefits and the right choice for your business depends on what you’re doing.

For example: tax rates are lower for BVs, but administration is more complex and annual costs can be higher. A greater turnover is usually necessary to offset these expenses.

On the other hand, if there is a greater financial risk or investment involved in the establishment of your business, then a BV may make a better choice.

To help the decision process you can draw up a list of pros and cons for each structure.

VOF: general partnership

A vennootschap onder firma, or general partnership, is a business that is run by two or more business partners. A defining aspect of the VOF is that every partner contributes something to the business, whether it’s labour, capital, assets, goodwill or knowledge. This model is often used by spouses or life partners who are also partners in business.

It’s important to understand the joint liability of a VOF: if your business partner makes a mistake that results in debt then you will also be held financially responsible.

In a VOF it’s also necessary to create "separate capital" where business capital contributed by partners is held separately from private capital. For instance in a separate bank account.

The VOF contract

It’s not legally compulsory to sign a partnership contract when setting up a VOF, however it is strongly advised to avoid misunderstandings between partners. This can be done either independently or via a notary.

The partnership contract usually sets out:
The name of the VOF
The business aim
The contributions of each partner
Profit distribution and offset of losses
Allocation of powers
Arrangements for illness or holidays

The VOF in a nutshell:

Establishment: free (small KvK fee) / partnership contract
Capital required: none
Governance: partners
Liability: all partners privately 100%
Social security: no sickness or unemployment benefits
Taxation: BTW / income tax / payroll tax (for employees)
Tax breaks: yes if requirements are met

 

Maatschap: professional partnership

The maatschap, also known as a "group practice" or "commercial partnership", is a business structure where self-employed individuals work alongside other professionals in the same field under a shared name.

This structure is useful for certain professions such as hairdressers, dentists, lawyers, architects or farmers.

Defining aspects of a maatschap are that partners are considered more or less equal, that every partner contributes something to the partnership (such as goods or labour) and that the financial gain is shared between partners. It is not possible for one partner to receive all the profits.

From a liability perspective, in a maatschap, partners may not make commitments on behalf of others. They must first either reach a joint agreement or issue a power of attorney.

The maatschap contract

It’s not legally compulsory to sign a partnership contract when setting up a maatschap. However a contract is strongly advised to avoid misunderstandings between partners and as evidence of business relations for the Belastingdienst.

The partnership contract can either be created independently or via a notary and usually sets out:
Who the partners are and what they each contribute (labour, capital etc)
Profit distribution based on contributions
Allocation of responsibilities and authorised powers (on day-to-day or managerial levels)

The maatschap in a nutshell:

Establishment: free (small KvK fee) / partnership contract
Capital required: none
Governance: partners
Liability: private if partnership fails its obligations
Social security: no sickness or unemployment benefits
Taxation: BTW / income tax / payroll tax (for employees)
Tax breaks: yes if requirements are met

CV: limited partnership

The commanditaire venootschap, or limited partnership, is similar to a VOF (general partnership) except that there are two kinds of partners: a managing partner running the business on a day-to-day level and a limited or silent partner in the form of a financial backer.

This is a good option for entrepreneurs who are short on capital and need a financial backer. It is also a way to grow an eenmanszaak or VOF. The investor becomes a partner in the business, providing not only financial support but also guidance of the company’s financial affairs.

In case of bankruptcy the managing partner of a CV is personally liable for any debts. The limited partner is not held responsible for any debts, however they will lose their investment. It is important for silent partners to avoid acting as managing partner to the outside world as this can affect their liability.

When registering a CV with the KvK it is not necessary for limited partners to provide personal details, the number of silent partners and the amount of capital they contribute is sufficient.

The CV contract

There is no legal requirement to sign a partnership contract when setting up a CV. However a contract is strongly advised to avoid misunderstandings between partners.

The partnership contract can be either created independently or via a notary and usually sets out:
Who are the managing partners
Who are the limited/sleeping partners
What each partner brings to the company (labour, capital etc)
How profits and losses will be distributed
Termination conditions of the CV

The CV in a nutshell:

Establishment: free (small KvK fee) / partnership contract
Capital required: none
Governance: managing partners & limited partners
Liability: private 100% for managing partners, limited liability for limited partners
Social security: no sickness or unemployment benefits
Taxation for managing partners: BTW / income tax / payroll tax (for employees)
Taxation for managing partners: income tax
Tax breaks: yes if requirements are met

Tax breaks for new businesses

There are several tax benefits, collectively known as the ondernemersaftrek (entrepreneurs’ deduction), that are available for new businesses in their first years. These can considerably reduce the amount of tax you pay in the first three to five years.

The ondernemersaftrek tax breaks include:
Self-employed deduction (zelfstandigenaftrek)
Starters allowance (startersaftrek)
SME profit exemption (MKB-winstvrijstelling)

Other tax breaks include:
General tax credit (algemene heffingskorting)
Labour tax credit (arbeidskorting)

Tax break requirements

To be eligible for the ondernemersaftrek you must fulfil certain requirements such as:
demonstrating the independence of your business
documenting activities (time records)
having three or more clients
working at least 1.225 hours per year in your business
having specific labour relationships with clients
displaying an entrepreneurial risk, such as money and / or time investments

To learn more about unincorporated businesses in the Netherlands and relevant tax breaks see the KvK brochure on starting a self-employed business.

Need help to set up an unincorporated business? Check out our listing of tax advisors and accountants.



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