Can you legally set up a business?
If you are an EU citizen, a member of the EEA (European Economic Area) or a Swiss citizen you a free to live and work in the Netherlands. If you are a non-EU citizen, you may need to apply for a work permit. Find more information on Visas & Permits and on setting up a business in the Netherlands.
What are the different legal forms of companies?
One of the first decisions you need to make is to decide what type of business you are going to set up. The legal form of the company determines your tax obligations and liabilities. Your business should fit into one of these categories:
Also known as one-man business or sole proprietorship. This means that you are the sole owner of the company and you are entitled to profits from the company. This does not mean that you will be the only person working in the company - you can have employees - but that you will be the only owner. As the owner of your company you will be responsible for all legal acts, assets and liabilities. Furthermore, you will pay income tax on the profit.
Limited partnership (Commanditaire Vennootschap - CV)
This is a special type of general partnership where one partner is 'active' while the other is 'silent'. The 'silent' partner can be active in business and yet still be considered a self-employed entrepreneur. Usually the 'silent partner' contributes with funds but bears less risk in the partnership. Furthermore, the name of the 'sleeping partner' cannot be used in the trade name of the partnership. A written agreement is not needed by law but it is highly recommended. 'Active' partners pay income tax while 'silent' partners are taxed on remuneration received.
General Partnership / Partnership under common firm (Vennootschap Onder Firma - VOF)
This is a partnership made up of at least two people who contribute something to the business, this can be efforts, capital, goods, etc. Each partner is considered a self-employed entrepreneur which means that they can be held liable if the partnership fails to meet its obligations. A written agreement is not required by law, but again it is highly recommended. Regarding taxes, each partner will pay his own income tax on his or her profit share.
Private Limited Liability Company (Besloten Vennootschap, BV)
A BV is a company limited by shares (private limited company), whose shares are privately registered. Shareholders are only liable for their own capital contribution. There are no legal requirements for a BV to have substance in the Netherlands. The only legal requirement is that the BV has a registered Dutch address.
Registering your trade name
The name you select for your business must be unique to the sector and region where you plan to work. It must also meet the conditions of the Trade Name Act (Handelsnaamwet).
You will have to register your trade name with the Chamber of Commerce (Kamer van Koophandel, KvK). You are required to register your company in person within the first week of your company opening. In order to do so, you need to book an appointment online.
If you want to register your trade name as a trade mark, you’ll need to register at the Benelux Office for Intellectual Property
Once you’ve completed your registration at the Chamber of Commerce, your business will be automatically registered with the Dutch Tax Authorities (Belastingdienst). When the Dutch Tax Authorities have received the data they will then issue a Value Added Tax (VAT) registration number (BTW nummer). You need a VAT number for sending invoices to your clients and for paying taxes. There are different taxes for each business structure. Some of them are:
› BTW (VAT)
› Income Tax
› Payroll Tax
› Corporation Tax
For more detailed information on the VAT number and the taxes you have to pay, check the Netherlands Chamber of Commerce (KVK) site.
Also if you intend to hire staff, you will need to register as an employer with the Dutch Tax Authorities.
Business owners in the Netherlands must keep detailed accounts for up to seven years. The administrative documents include records of invoices, invoices to pay, expenses connected with business activities, income and private use of goods and services.
In the Netherlands, it is not required to take out insurance for your company.
To protect your new business from unforeseen misfortune, it is highly recommended to examine the possibilities of insuring your risks. For instance, you could take out a business and professional liability insurance. You are, however, obliged to take out health insurance.
You can get more information in the KVK Brochure ‘Starting your own business’.