Foundation

What is a foundation?

A foundation is an organisation that does not aim to make a profit. Its purpose is to support a social or non-profit cause. It may also run a business, but its profits must be allocated to the foundation's cause or purpose.

A foundation always has a board of directors. If you decide to also appoint a supervisory board, you must lay this down in the articles of association (statuten). A supervisory board monitors the board of directors. It is not mandatory to appoint a supervisory board. A foundation has legal personality. This means that the board members are usually not liable for any debts with their personal assets.

Unlike the association, a foundation has no members. As a result, there is no need for a members' meeting to take important decisions. Besides being used as a legal form for charities, the foundation also has other uses For example, professional football clubs, broadcasting companies, hospitals, museums, laboratories, and healthcare institutions can also be a stichting.

A foundation's income comes from donations, loans, subsidies, and inheritances. A foundation has no shareholders.

Setting up a foundation

You do not need a minimum start-up capital for a foundation. You will need a civil-law notary to draft a deed of formation, stating that you have created a stichting and listing its articles of association. The notary will then usually arrange to register your foundation in the Business Register (Handelsregister) at KVK. You pay a one-time fee to register your foundation in the Business Register. The costs for a civil-law notary vary between €400 and €1,000.

It is possible to set up a foundation on your own or with other individuals and/or legal entities such as a private limited company (bv). You can even do this posthumously in your will.

All board members must be registered in the Business Register. You remain personally liable until you have done this. If your foundation runs a commercial company, you must also register it in the Business Register.

UBO register: report your UBOs

Most businesses that register in the Business Register) have to include their ultimate beneficial owner(s) or UBOs in the UBO register. UBOs are people who have direct or decisive influence on the foundation. For more information, see the article What are UBOs?

Administration

You are legally required to keep records. Foundations that carry out commercial activities must file their financial statements with KVK if their turnover is above a certain amount. The information you need to file depends on the size of your business. The average annual administration costs for a foundation range from €600 to €1,800.

Taxes

A foundation without commercial activities does not pay tax. If you also run a business, your foundation usually pays corporate income tax (vennootschapsbelasting). In this context, a 'business' is any organisation running on capital and labour for the purpose of making profit through commercial activities and economic transactions. Any profits must be allocated to the foundation's cause or purpose. Not all foundations have to pay corporate income tax. Read which foundations are exempt.

Whether a foundation has to pay and charge VAT depends on its specific situation (in Dutch).

Liability

A foundation is a legal entity, which means that its board members are theoretically not liable for any debts. There are, however, exceptions to this rule. For example, mismanagement, negligence, or failure to list the foundation in the Dutch Business Register.

Inform KVK about any board member changes within 8 days. If they remain listed in the Dutch Business Register, former board members could be held liable for debts.

Since 2021, the same rules on governance and supervision have applied to all legal entities. This is set out in the Act on Management and Supervision of Legal Persons (WBTR). The WBTR also strengthens the personal liability of directors of some legal entities, such as foundations. Find out what the WBTR means for your organisation.

Signing authority

The board as a whole is authorised to sign. This means that members may either jointly or individually sign contracts or perform certain legal acts on behalf of the foundation. For example, reporting a change in the Business Register. These agreements are laid down in the articles of association.

The board can also choose to appoint power of attorney to someone else. This person is then authorised to act on behalf of the foundation. It can be useful to register this person in the Business Register. This way your business partners also know who is allowed to act on behalf of the foundation.

Personnel

A foundation can employ staff. You then have to pay payroll taxes and social contributions for your personnel. If you are hiring an employee for the first time, you must register as an employer with the Tax Administration. You must also report this to KVK. Read the checklist Employing staff in the Netherlands for more information.

Board members can also be paid employees of the foundation. A director is in paid employment if they have an employment contract, carry out work, and receive compensation for it. The compensation must be in proportion to the work performed. The director is then not allowed to make decisions independently.

Associations with an ANBI status are not allowed to employ board members. Usually board members receive an amount to cover the costs they have incurred.

Social security and national insurance contributions

Board members employed by the foundation are covered by any employee insurance schemes. If you are not employed, you can take out voluntary insurance. You can also build up a pension yourself.

Ending a foundation

If you want to end your foundation, the board first has to decide on dissolving the legal entity. A dissolved legal entity does not immediately cease to exist. The legal entity is not terminated until all debts and payouts have been paid. Do assets remain? You have determined in the articles of association where that money goes.

Read more about dissolving a legal entity.

Do you want to amend the articles of association? This is decided by the board. In the articles of association you have laid down how the board can amend the articles of association. The notary verifies the changes and implements them.

Does the composition of your board change? Report the board change to KVK within 8 days. Resigned directors who are still in the Business Register run the risk of being held liable.