In 1976, a new corporate law was introduced in The Netherlands, as “Book 2” of the Civil Code, which in broad terms simplifies and liberalizes some aspects of the formation and operation of most of the corporate forms dealt with below, as well as introducing new rules covering corporate governance, and dealing with directors' liability.

 

NV (“naamloze vennootschap”)

 

These are some of the main characteristics and requirements attaching to Dutch public limited liability companies (NVs): a minimum of one shareholder is required, who may be an individual or a corporate entity; there must be at least one director – more importantly, there must be at least one director resident in The Netherlands; directors can be individuals or corporate entities; directors exercise wide powers, including those of the Anglo-Saxon company secretary; authorized capital must be at least € 45,000.= and must be paid-up on incorporation; shares can be registered or bearer; a registered office must always be maintained in The Netherlands.

 

BV (“besloten vennootschap”)

 

This is the form historically taken by almost all companies in The Netherlands, whether for domestic trading or for international purposes.

 

The Dutch private limited liability company (BV) is quite similar to the public limited liability company (NV), except that the authorized capital must be at least € 18,000.=, and that shares can only be registered shares.

 

The incorporation process is somewhat cumbersome, involving an investigation of prospective shareholders by the Ministry of Justice, permission for the chosen name from the Trade Register of the Chamber of Commerce & Industries, and other administrative procedures.

 

The Dutch Council of State, a constitutional established advisory body to the government, put forward substantial proposals to eliminate the preventive supervision on company formation (expected to enter into force in 2009).

 

Meanwhile, the most-efficient way to acquire a private limited liability company (BV), is to purchase it “from the shelf”. Shelf companies are widely used and accepted in The Netherlands, and they can be obtained much faster than tailor-made ones, and with much less effort.

 

Cooperative (“coöperatie”)

 

The most important moment of a corporate structure is when dividends or capital gains are to be distributed to the shareholder(s).

 

Especially the distribution of dividends can incur a large tax burden, due to the witholding taxes levied upon distribution. Avoiding these is therefore very beneficial, and can be achieved quite easily with the use of a Dutch cooperative.

 

These are some of the main characteristics and requirements attaching to cooperatives: it should have at least two members at incorporation, who may be individuals or corporate entities; the liability of the members can be equal, limited to their contribution, or excluded; there must be at least one director – more importantly, there must be at least one director resident in The Netherlands; directors can be individuals or corporate entities; it does not have minimum capital requirements, and it can carry-out any type of activity (including acting as a finance or holding company).

 

The main benefit of using a cooperative is that no dividend witholding taxes are levied on dividend distributions, and that the participation exemption applies to qualifying shareholdings.

 

A cooperative is subject to Dutch corporate income tax; it is equally taxed as a public limited liability company (NV), or private limited liability company (BV). It is a qualifying entity under Dutch tax treaties with other jurisdictions, and the European Union (EU) “Parent-Subsidiary Directive”.

 

It can be recommendable to interpose a Dutch private limited liability company (BV), to avoid unclarities on the use of the cooperative with the fiscal authorities at the level of the subsidiaries.

 

The absence of taxes on dividends makes the use of a Dutch cooperative very attractive in international tax planning, as it can be used in holding structures but, for instance, also in private equity structures.

 

General partnership (“vennootschap onder firma”)

 

Partnerships are recognized under the Dutch Civil Code. In the general partnership each partner is liable for all the debts of the partnership, as in common law partnerships.

 

Partnerships are fiscally transparent.

 

Details of partnerships and of the partners must be entered in the Trade Register of the Chamber of Commerce and Industries.

 

Limited partnership (“commanditaire vennootschap”)

 

The Dutch limited partnership is similar to the general partnership, except that it has one or more general partners with unlimited liability, who manage the partnership, and one or more limited partners, each of whose liability is limited to the amount of contribution.

 

The identity of the limited partners does not have to be entered in the Trade Register of the Chamber of Commerce and Industries, or otherwise publicly disclosed.

 

Foundation (“stichting”)

 

The foundation was originally created for welfare purposes, but is now often used to act as a trustee or manager of assets for a third party, or to control shares in companies (“stichting administratiekantoor”); shareholders receive certificates of participation in return for shares transferred to the foundation, and can be paid dividends. These certificates can be either registered or bearer, and are freely transferable.

 

A foundation is constituted under the Dutch Civil Code; the main characteristics of the foundation are as follows: it must be entered in the Foundations Register of the Chamber of Commerce and Industries; there is no minimum capital requirement; it does not have members or shareholders; it is managed by one or more directors, who do not share in the profits or assets, and who can be individuals or corporate entities – at least one director must be resident in The Netherlands; the identity of beneficiaries or holders of certificates of participation need not be publicly disclosed.