Types of entities for company formation in the Netherlands

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Along with other developed countries, the Netherlands is also a founding member of the European Union and the World Trade Organisation, playing a leading role at the heart of Europe. With a trade policy and an investment policy considered to be one of the most liberal in the world, it has been the 7th largest economy in Europe for many years.

The Netherlands is undoubtedly a world leader when it comes to international business. Plus, you might already know that almost 95% of the local population speak fluent English. This is one of the reasons why thousands of international companies are involved in Netherlands company formations to expand their business.

Many Dutch company formation specialists have been providing their services quite efficiently. If you are looking forward to opening a company in the Netherlands, you need to know about conditions, prices, paperwork, and other details to be followed.

Major types of entities

Different types of entities are there in the Netherlands, depending on the type of business you will perform. The major types of entities are incorporated business structures for those businessmen who have separate business and personal assets. The personal belongings are protected from their business debts.

The unincorporated type is for those entrepreneurs who are entirely responsible for their incomes and debts. This is because there is no legal delimitation between their personal and business assets.

The General Partnership

This kind of business is best suitable for companies with two or more partners united under the same name and have the same economic objectives and unlimited liability on the firm’s debts.

Plus, they share the profits on agreed terms, and they don’t have to present a minimum share capital. The personal assets of general members of the partnership can be taken by the creditors in the case where there are debts that can’t be covered by the company funds.

Dutch Limited Partnership

To register another form of partnership, the Dutch Limited Partnership is compulsory for at least two partners: one general partner who has unlimited liabilities and takes the management decisions, and the other one is a silent partner who is responsible for delivering the capital to the firm and whose liability is only limited to his contribution. 

Public Liability Company (NV)

This form of business is considered appropriate for large investments with at least a share capital of 45,000 EUR. The capital shall be transferred to the company’s bank account before incorporation. Practically this makes it difficult to incorporate a Dutch public liability company as most banks do not open bank accounts before incorporation and registration.  

Limited Liability Company (BV)

Far most popular legal form is the limited liability company. It is easy to incorporate and provides more flexibility in comparison to a public liability company. Providers of Dutch company registration services can have your business registered remotely if you can not travel to the Netherlands. There is no capital requirement for a BV.

Branches/Subsidiaries of foreign companies

The degree of independence of the local branch or subsidiary related to the parent company is the significant difference between these two business forms. Several company formation agents in the Netherlands can help you choose the proper entity type for your business.

Tax benefits and advantages

The Netherlands has a liberal tax regime that includes an extensive network of double-taxation treaties. Not only that, but there are many other aspects of Dutch tax law. Therefore, you will need specialist advice. The marginal rate is 15-25% and the effective rate is often even lower, which is very competitive in comparison to neighbouring countries.