Legal aspects of selling your business

What is due diligence?

The buyer may request access to your records before you both sign the contract. The buyer will analyse your records and figures to check whether they are correct and whether your forecasts make sense. By analysing your records, the buyer gets to know more about your customers and contracts. This process is also known as due diligence. As the seller, you are obliged to provide accurate information during due diligence.

Document agreements in a letter of intent

You can draw up a declaration of intent to make agreements on the negotiation procedure. For example, about exclusivity and confidentiality. With a declaration of intent, both parties know where they stand.

Do you need a civil-law notary?

The sale is not finalised until you and the buyer have both signed the contract. For certain legal structures, you also need to engage a civil-law notary.

• When selling shares in a bv (private limited company) or nv (public limited company), you need a notary, as the shares can only be transferred with a notarial transfer deed. This deed is a legally required document. It has to be signed when shares change hands.
• You do not need a notary in order to sell an eenmanszaak (sole proprietorship), vof (general partnership), or parts of a bv without the transfer of shares. In these cases, you can draw up your own purchase agreement. But it is recommended to seek legal advice. Important: if you are also transferring real estate, you do need to engage a civil-law notary.

Intellectual property in case of sale

Does your business have intellectual property (IP), such as trademarks or patents? The type of transaction determines who owns the IP after the transfer.

• In a share transaction, all assets of the bv automatically change hands, including the intellectual property.
• In a transaction of assets and liabilities, you have to decide which property to sell and which to keep, including IP. Laws and regulations on IP can be very complicated, so it is best to seek legal advice.

Taking over a business lease with substitution

Are you selling your business or looking to take over another business? The new owner of a business may be able to also take over the lease contract of the business premises. The new owner will then rent the business space at the same price and with the same conditions. This is called subrogation. Here is how it works.

Notify the Netherlands Chamber of Commerce KVK

You are required to notify the Netherlands Chamber of Commerce KVK of changes to your business.

Tax implications

Selling your business has tax implications. What you have to pay depends on the legal structure of your business. If you are selling an eenmanszaak or vof, you have to calculate the discontinuation profit (stakingswinst). This is the difference between the sales price and the book value of the business at the time of transfer. The discontinuation profit is part of your income in the year you sell the business. You have to pay income tax (in Dutch) on the discontinuation profit. In some cases, you are entitled to discontinuation relief (stakingsaftrek). This means you pay less tax on your discontinuation profit.

When selling a bv or nv, you will face different taxes. Which taxes depend on the legal structure. Are you also selling real estate? You will have to pay property transfer tax (overdrachtbelasting). If you have a ‘substantial interest’ (een aanmerkelijk belang) and are selling privately owned shares, you will have to pay income tax (in Dutch).

Want to know more about the tax implications in business transfers? Read the guidance on Transferring your business (in Dutch) from the Dutch Tax Administration.