Private limited company (bv) in the Netherlands
What is a Dutch bv? A bv is a legal entity, equivalent to the private limited company. You do not need any starting capital and you can take on investors. You can start a bv on your own or together with partners. Your private liability as a director is limited.
What is a private limited company or bv?
A private limited company, or in Dutch a besloten vennootschap (bv), is a business structure with legal personality. This means that the bv is generally speaking liable for any debts, rather than you as an individual. As a director, you are an employee of the bv and you act on its behalf. You can set up a Dutch bv with yourself as the only director/major shareholder (dga) or with other individuals and/or legal entities.
Shares
A private limited company's equity is divided into shares that are owned by shareholders. They also hold ultimate power. This means they have the (voting) right to make decisions about the business. Shares can also come with an entitlement to part of the profit (winstrecht). A bv can issue various shares, even ones without any profit or voting rights.
A legal entity is obligated to, at least once a year, hold a general meeting (of shareholders). This general meeting is where final decisions are made and where financial statements are approved. From 1 January 2025, you will be allowed to organise a fully digital general meeting. This is in addition to the already existing option of a partially digital (hybrid) meeting.
Management of a bv
The company directors run the business on a day-to-day basis. A private limited company may appoint a supervisory board to monitor its board of directors (two-tier board), or the supervisors may be part of the board of directors (single-tier board).
In smaller bvs, the director is often also the only shareholder. Do you act as director and do you own more than 5% of the shares? In that case, you are a director-major shareholder, in Dutch directeur en grootaandeelhouder (dga). You can opt to have more directors, to share the responsibilities. There is no legal requirement for the number of directors for bvs.
Setting up a bv
You cannot set up a bv yourself. You have to hire a civil-law notary, as there are legal requirements for setting up a private limited company. There are essentially 4 steps to setting up a bv:
- Making a deposit of €0.01 starting capital – cash or in kind;
- Registering in KVK's Business Register (Handelsregister) – usually carried out by a civil-law notary (you remain personally liable until the registration is complete);
- Registering at the Netherlands Tax Administration (Belastingdienst) – this also is usually taken care of by the civil-law notary.
Most businesses that register in the Dutch Business Register (including several European legal structures) have to include their 'ultimate beneficial owner(s)', or UBOs, in the UBO register. For more information, see the article What are UBOs? (KVK website).
As starting capital, you pay at least €0.01 into the company. This can be done in cash, but also in kind, for example by contributing goods. Their value is then expressed in money and belongs to the company.
You can also set up a bv online. Setting up a bv online happens with a digital notarial deed. You do not physically need to visit the civil-law notary. You can set up a bv with a digital audio-video connection. In some cases, the notary may refuse to set up the bv online. If they suspect identity fraud, for example. Or if they have doubts about your legal capacity.
It is possible to start trading before you have set up your private limited company. This is on the condition that you are registered in KVK's Business Register as a bv in oprichting (bv i.o.). A civil-law notary must then complete a form stating that they will be handling the incorporation on your behalf. You may then operate as a 'private limited company under incorporation'.
Make sure you clearly state that you are acting on behalf of a bv i.o. when entering into any agreements with business partners. Any contracts are entered into as a legal entity in formation. You are personally liable for your actions on behalf of the bv i.o. Once the bv has been established, you can transfer contracts to your bv, subject to agreement from the other party.
Sometimes sole proprietorships use bv i.o. next to their name while in the process of incorporating their bv. Be aware that you are entering into an agreement as a sole proprietorship or eenmanszaak when you sign a contract in this phase.
Costs
The costs for starting and running a Dutch bv are:
- Registration fee for KVK's Business Register
- Civil-law notary’s fee (varies; could be anything between €500 and €1,000)
- Bookkeeping / accounting fee (varies; usually between €600 and €1,800 per year)
Depositing financial statements
Like any business, private limited companies have to keep records. Bvs also have to produce financial statements and deposit them with KVK. Which data you have to submit depends on the company size.
Taxes and the bv
As a legal personality, the bv will also have to file VAT returns (aangifte omzetbelasting), usually every quarter, and pay VAT over profits made. If the bv has an annual turnover of up to €20,000, you can make use of the small businesses scheme (KOR). In that exceptional case, you do not charge or pay VAT.
As a (managing) director, you are employed by the bv. The bv deducts payroll taxes from your salary. This is an advance levy for box 1 of the income tax.
If you own at least 5% of your company's shares, then you have a 'substantial interest' (aanmerkelijk belang) and are referred to as a 'director and major shareholder' (dga). The Netherlands Tax Administration will then not allow you to pay yourself an excessively low or zero salary. This is referred to as the gebruikelijkloonregeling or 'customary salary scheme' (in Dutch) for directors and major shareholders. Your salary has to be in line with market levels, which is why the Ministry of Finance has set a number of criteria.
Your customary salary must be at least the highest of the following 3 options:
- 100% of the salary of a person in a comparable job;
- the salary of the employee with the highest wages in your company; or
- a fixed sum of at least €56,000 (in 2024).
If you can prove that the customary salary in your business sector is lower, you may ask the Tax Administration to set a lower salary requirement for you.
You can also be employed by another private limited company, for example the holding company. If so, the holding company withholds payroll tax. The holding company will send an invoice to the operating bv for your work.
As a dga, you have to pay income tax (inkomstenbelasting) on your salary and perhaps Dutch dividend tax (dividendbelasting). If you wish to receive more income than the customary salary, paying yourself more salary from your bv is a relatively expensive option. A less expensive option (fiscally) is to pay out a dividend on your shares.
Your bv will have to pay corporate income tax (vennootschapsbelasting, vpb) over its profits. You have to file a corporate tax return for your bv once a year. The bv can make use of various tax deductions for the corporate income tax, such as different forms of investment credit.
When the bv pays dividends to shareholders, the bv deducts dividend tax on this amount. You will therefore pay tax in box 2 of the income tax on the dividend received. You may deduct any dividend tax that was withheld before from your tax return.
See additional information about paying taxes in the Netherlands.
The 'payment test' – transferring funds from a Dutch bv
Are you a director and do you need to transfer money from the bv? For example, to pay out dividends to shareholders? You then have to perform a 'payment test' (uitkeringstoets). This is a way to see if there are sufficient funds in the bv. This helps safeguard the business's financial position and helps ensure that creditors will be paid.
The bv's board of directors has to protect its creditors' interests by assessing whether the bv will still be able to meet its financial obligations (accounts payable) for a period of about 1 year after taking out the money. If so, the board of directors has to formally approve the withdrawal. If not, the board of directors is not authorised to continue. If you do it anyway, you can be held personally liable.
No more unlimited borrowing
You may borrow up to €500,000 from your own bv. Do you borrow more? Then the amount above this threshold counts as income from substantial interest and you will have to pay tax over it (Box 2). There is an exception for financing your own home. In 2023, the maximum amount you could borrow was €700,000. Read more about borrowing from your own bv (in Dutch).
Issue of new shares
To get extra money, the bv can issue more shares (issue of shares). The person who receives the shares must pay the bv for them. Note that the articles of association of the bv may contain an authorised capital. The authorised capital is an amount that indicates the maximum number of shares that may be issued.
Liability
A bv is a legal entity. That means that you are, in theory, not personally liable for your business debts. There are exceptions to this rule. For example, in case of mismanagement or before the bv is registered in the Business Register. Read more about the liability of directors.
Director and major shareholder (dga)
Are you a director and major shareholder (dga)? Then banks will generally ask that you co-sign for loans as a private individual. In this case, you are then personally liable for repaying any loans. If you are only a shareholder, your liability is only limited to the amount of your participation in the bv.
Signing authority
Directors may either jointly or individually sign contracts or perform certain legal acts on behalf of the company. This is stated in the articles of association. Directors can also give someone else power of attorney. This person may then also act on behalf of the company. It is not mandatory to register this person with the Business Register, however, it can be useful. For example, it is a way to inform your business partners about who is allowed to act on behalf of the company.
Personnel in the Netherlands
A bv can hire personnel. You have to pay Dutch payroll taxes and social contributions for your employees. If you are hiring employees for the first time, you must register as an employer with the Tax Administration. You must also report this to KVK.
Dutch insurances and pension
As a director, you are employed by the bv and covered by social insurance. There are exceptions, namely if you:
- have so many shares (possibly together with your spouse), that you cannot be fired against your will;
- together with your immediate family members, own two-thirds or more of the votes to be cast;
- are a director, hold the shares together with all other directors, and all shareholders participate equally in the company.
In this case, you can take out insurance yourself. Read more about insurances and pension as a sole proprietor.
Are you pregnant?
Then the bv does not have to continue paying you. You can take out voluntary Sickness Insurance for maternity leave with UWV. Read more about the options for maternity leave (in Dutch).
Pension
For some professions and business sectors, you as an entrepreneur are also obliged to participate in a pension scheme. In addition, you can take care of a supplementary pension yourself, with the purchase of annuities, for example, or by saving up money independently.
Ending a Dutch bv
If you want to sell your company, you have 2 options:
- you can sell your shares. You then pay income tax over the return from the sale.
- divest the business from the bv by selling off its equipment, inventory, etc. You then have to pay corporate income tax on the (book) profit.
Is a shareholder in the divesting bv is itself a bv (holding company)? And does it own 5% or more of the shares? Then this holding company theoretically pays no tax on the proceeds. If you want to end the bv, a formal decision from the general meeting of shareholders is required to dissolve the legal entity. The bv then needs to pay off debts and dividends before it ceases to exist.
Read more about ending your private limited company (bv).
Changing the legal structure
You can change a Dutch bv to an nv, for example, if you want to be able to attract more capital. To change a bv into an nv, you must amend the articles of association and have a deed of conversion drawn up by a civil-law notary. Check with the civil-law notary what other steps you need to take. You can also change your bv into a sole proprietorship (eenmanszaak) or general partnership (vof). For example, in case of disappointing profits.
Note: Be aware that for tax purposes, the Netherlands Tax Administration views changes in legal structure as ending one business and starting another.
More information
Do you still have questions about starting or running your bv in the Netherlands? Call KVK for help and advice: 088 585 22 22, or consult a financial adviser.
Statistics: private limited companies
Number of private limited companies.
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External links
Questions relating to this article?
Please contact the Netherlands Chamber of Commerce, KVK