Professional partnership (maatschap)

What is a professional partnership?

A professional partnership (maatschap) is a business in which at least 2 people work together. Each participant is co-owner. The co-owners are also called partners. Partners carry out professional activities, such as dentists, physiotherapists, or lawyers.

Each partner contributes something. This can be money, but also goods or labour. Starting capital is not required. A maatschap does not have a legal personality. This means partners are equally liable for possible debts of the company.

Changes in the partnership structures

A maatschap is a partnership, just like the general partnership (vof) and the limited partnership (cv). The difference between a professional partnership and a general partnership will disappear. There will then only be the partnership and the limited partnership. New rules will apply to the partnership. It will be easier for partners to join and leave the company. And the partnership will have legal personality. Read more about the new partnership structure and rules.

Setting up a professional partnership

If you want to set up a professional partnership, you must register your partnership in the Business Register. You pay a one-time registration fee (inschrijfvergoeding) to do this. It is not possible to register a non-trading 'undisclosed partnership' (stille maatschap zonder onderneming).

KVK registers all the basic details of your company, such as its name, activities, and the names of the partners. You prepare your registration online.

Register your UBOs

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. UBOs are people who, for instance, have a substantial interest of over 25% in the maatschap. See for more information the KVK article What are UBOs?

The partnership contract

It is not mandatory to draft a partnership agreement when setting up a maatschap, but it is often sensible to do so. In the contract, you set out agreements about your partnership. A partnership contract states, for example:

• Who the partners are and the equity they each bring into the company. For example, cash, labour, or equipment.
• How profits are shared. This is based on the equity brought into the maatschap unless otherwise specified. Partners are not allowed to agree that 1 partner (maat) receives all the profit.
• Who is authorised to do what. For example, each partner is permitted to perform any act of management as part of day-to-day operations. Other acts, such as buying expensive equipment, should be agreed jointly by all the partners. You can specify individual powers in the partnership contract (maatschapscontract).
• How and when you end the partnership.

You can draw up a partnership contract yourself. Or you can arrange it through a lawyer or civil-law notary. The purpose of the partnership and the powers of the partners are recorded by KVK in the Business Register.

The costs for drawing up a partnership agreement differ depending on the civil-law notary or lawyer. On average, the cost are between €200 and €400. It is not mandatory to draw up a maatschapscontract.

Administration

You are legally obliged to keep records. You can outsource this to a bookkeeper or accountant. The cost ranges from €500 to €1,000 per year.

Taxes

Each partner pays income tax on their part of the company’s profit. If the Netherlands Tax Administration regard you as an entrepreneur for income tax, you are entitled to an SME profit exemption (mkb-winstvrijstelling). If you also meet the hours criterion (in Dutch), you are entitled to more tax benefits, such as the private business ownership allowance (zelfstandigenaftrek). Starters may also be eligible for tax relief for new companies (startersaftrek).

The professional partnership also pays VAT.

Read more about tax benefits and deductions.

Division of profit

There are 2 ways to divide the profit:

• You divide the profit as laid down by law. Each partner receives profit in proportion to the equity they bring into the company.
• You make agreements with each other about the division of profit, for example in a partnership contract. It is not possible for 1 partner to receive all the profits. You can agree that 1 partner is responsible for all losses.

Liability

A professional partnership is not a legal personality. This means that the partners are responsible for their own actions. And also personally liable for the partnership's debts. But, unlike other partnership structures, you are only allowed to make commitments on your own behalf in a maatschap. This means that if, for example, you buy equipment, enter into contracts with customers, or hire someone, you are the one responsible for any possible debts. Creditors cannot make a claim on partners.

Creditors will first attempt to make a claim on your business assets. If you have insufficient assets to pay off your debts, your private assets will be seized. If you are married in community of property, your partner is also liable for your debts. You can prevent this by signing a prenuptial agreement.

If a partner acts against the law or breaks any agreements, then the other partners are usually not liable.

Only in the following instances are all partners equally liable:

• The partners have issued one another power of attorney as specified in a partnership contract.
• The partners decide to act jointly or make a joint purchase, for example, hiring a receptionist or renting a practice.

Signing authority

In a professional partnership you only make agreements for yourself. You cannot sign contracts or perform legal acts, such as reporting a change in the Business Register, on behalf of the partnership.

Do you want some partners to have more authority than others? Then you can make agreements in the form of power of attorney and lay this down in a partnership contract. You must report the changes to KVK.

The maatschap can also assign power of attorney to someone else. This person may then act on behalf of the professional partnership. 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 company.

Personnel

A professional partnership may hire staff. You must 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.

Social security and national insurance contributions

As a partner, you are not an employee. This means you are not covered under any employee insurance schemes. You are entitled to an old-age pension (AOW) on reaching retirement age. This pension is a minimum income, which you have to supplement yourself.

Because you are not an employee, you are not entitled to any of the benefits available to regular employees, such as sickness, unemployment, or disability benefit (ziektewet, WW, and WIA respectively). It is up to you to take out disability insurance yourself. If you are pregnant, you are entitled to a maternity allowance of at least 16 weeks. You can apply at the Employee Insurance Agency (UWV). Read about the terms and conditions for maternity benefit.

Health insurance is mandatory and basic cover is sufficient. You pay a premium to your health insurance company and a contribution as part of your tax return.

Depending on your type of business, it can be wise to take out additional insurance.

Ending a public partnership

The maatschap ceases to exist if a partner leaves the partnership or dies. However, it is possible to include a survivorship or takeover clause in the partnership contract, so that the remaining partner(s) can continue running the business. For example, the partnership can continue with a new partner or as a sole proprietorship. In the contract, you agree on who is entitled to what and how you divide the business.

If the partnership stops altogether, you must dissolve the company. To do this, all the partners must give notice. After this, the partners must divide and liquidate the assets. This means that the partners pay the debts and possibly get their share back in cash or in kind, such as products. The way this is done is set out in the partnership contract. For example, you can agree that you divide what remains based on each partner's share of the profits. Or that if there are any remaining debts, you pay the debts from your private assets.

Make sure you report the changes to KVK and the Tax Administration.

Read more about ending your professional partnership

Changing your legal structure

You can change a maatschap into a private limited company (bv). One of the differences is that the BV is liable for finances and possible debts. There are several ways to change a maatschap into a BV. These steps are similar to changing a sole proprietorship into a BV. You must divide the shares in the bv in the same way as the assets were divided in the partnership.

If a partner leaves or dies, you can change the professional partnership into a sole proprietorship or, if there is more than one other partner, continue the maatschap. This is only possible if the partnership agreement contains a survivorship clause or take-over clause. This ensures that the partner(s)who remain can take over the contributions of the departed or deceased partner.

Note: Be aware that for tax purposes, the Tax Administration views changes in legal structure as ending one business and starting another.

Professional partnership between partners

A maatschap is also a suitable legal form for spouses or life partners to work together. If the Tax Administration considers both partners to be self-employed, this provides double tax benefits. You are both entitled to various exemptions and deductions. However, the division of profits must reflect how the work is done. For example, you may not share profits 50/50 if one partner performs 90% of all the work.

Purchasing a partnership interest

You can join a professional partnership at a later stage, for example, when a partner leaves, because the existing partnership wants to expand, or to take over the company in the long term. The purchase price then largely consists of goodwill.