The BV (besloten vennootschap), a closed corporation or private company with limited liability, is the most common form of incorporated business in the Netherlands.
You can set up a BV as an individual or with others, in which case the ownership is divided into shares. The shareholders of the BV hold the decision-making power of the company, however on a daily basis a BV is usually run by the company directors. You can be both a shareholder and a director, in which case you will be considered an employee acting on behalf of the company.
BV owners and salaries
If you are the only shareholder and director in your BV you will then be referred to as the director and major shareholder, or DGA (directeur-grootaandeelhouder) in Dutch. As a DGA or majority shareholder, the Belastingdienst requires you to pay yourself a salary from your BV, which is a minimum annual amount of 44.000 euros, in line with market values. Alternatively, a cheaper option is to pay out a dividend to yourself.
From January 2017, directors and major shareholders of BVs that qualify as startups can pay themselves a minimum annual wage (approximately 20.000 euros in 2016) for the first three years of operation, rather than 44.000 euros.
2012 changes to BV requirements
In the past, entrepreneurs were required to have at least 18.000 euros capital to start a BV. However, in 2012 the Dutch government revised company law to make it easier to establish a BV. From October 1, 2012, founders are only required to put up 0,01 euros capital to establish their BV, and additional documents such as bank declarations and auditors’ certificates are no longer necessary.
BV in formation
If you want to start doing business before you have fully established your BV you can also set up a BVio (BV in oprichting or "BV in formation"). With this status you can trade, sign contracts and enter into business agreements, making clear to business partners that your company is still a BVio. Your company will be registered as a BVio at the KvK and your notary will need to certify that they are processing the incorporation of your business. You must also be aware that you can still be held personally liable during the BVio phase.
The BV vs the eenmanszaak
When first starting up your own business, some entrepreneurs are undecided about whether a BV or an eenmanszaak is the best form for their company.
The eenmanszaak offers quick establishment, simple administration and tax breaks in the early years. It often best fits individual such as freelancers (ZZP’ers) and small business owners. On the other hand, if there is a higher turnover, investors or a greater financial risk involved in the establishment of your business, then a BV may make a better choice.
It is not unusual for a person to start a business as an eenmanszaak and then change it to a BV once it has reached an appropriate size. If you are undecided about what form works best for you, then it’s wise to weigh up the pros and cons for each form or to seek the advice of a financial advisor.
The BV in a nutshell
- Establishment: notarial deed of incorporation
- Capital required: 0,01 euro, notarial costs
- Governance: executive board
- Other bodies: shareholders (& potentially board of directors)
- Liability: board of directors in cases of negligence
- Social security: yes, however no social security benefits for major stakeholders
- Taxation: corporation tax on profits / income tax on board member salaries / dividend tax / BTW / payroll tax (for employees)