What issues should I consider in order to set up and develop a business?

The Chamber of Commerce (KVK) has created a guide in English to help you starting your own business. Below we have summarised the most relevant information. https://www.kvk.nl/english/starting-a-business-in-the-netherlands/

Business.gov is a recently launched website initiative, providing answers to the many questions related to starting a business in the Netherlands. They also have several online webinars which can be watched for added information: business.gov.nl

 The Citizen Service Number

You need to have a Citizen Service Number (BSN) issued by the municipality in which you reside. The BSN is used by all public organisations in your dealings with them.

Business plan

Providing a business plan is one of the prescribed criteria for entrepreneurs who are not EU, EEA and Swiss nationals and wish to begin their own business in The Netherlands.

The starting point should be a clear idea of your goals, targets and expected clients. According to typical advice, the main issues that need to be addressed are:

• which legal form best suits the enterprise
• which products or services will you offer– DO’s and DON’Ts
• who will be your clients
• promotional activities to get contracts;
• how to optimize visibility toy our target group
• prices and fees
• financial plan (available budgets, expected turnover, investments)
• which insurances do you need
• permits and/or licenses required
• form of administrational
• what should be included in your General Terms and Conditions – if applicable?

Company Name

Choosing a good company name for your company is very important but not easy. A few tips:

• Your business name should fit you and your company, now, but also in the future.
• It is best if the company name is short, to the point, easy to remember and to search on the internet.
• Make sure that your company name is unique and does not already exist as brand or domain name. Check in the Commercial Register. (You will find a tool in the KvK link below, Dutch only)
• Be alert to cultural sensitivity and inappropriate or silly words in Dutch. Think about how the name sounds in English and other languages should you ever consider taking your business abroad.

Find out more about how to choose a business name on the KvK’s website:

www.kvk.nl/english/starting-a-business-in-the-netherlands/choosing-a-business-name/

 Legal Form

Entrepreneurs in the Netherlands have to choose a legal form for their business. That applies also to self-employed professionals and freelancers. The choice will determine, for example, liability and tax obligations.

 Types of legal forms

There are legal forms with and without corporate (legal) personality. An important difference is that forms without corporate (legal) personality involve debt liability for both the company assets and your private assets. For legal entities liability is tied solely to company assets. Visit the question different types of legal forms to get more detailed information on this topic.

Sole proprietor or sole trader (Eenmanszaak)

Most people decide to set up an Eenmanszaak, literally one-man-business, when starting their own enterprise.  It’s quick and easy to do, and often offers more tax benefits than setting up a private limited company (BV), especially in the early years. The downside is that you are personally liable for your business debts and that you cannot have shareholders under this legal form.

In an Eenmanszaak (one-man business) you will be the fully independent founder and owner. More than one person may work in a one-man business, but there can only be one owner. A one-man business can also employ staff. The Dutch term ‘Eenmanszaak‘ only refers to the legal form and has nothing to do with the number of people employed by your business.

All you need to do is register with the Dutch Chamber of Commerce (KvK). You will be listed in the Commercial Register (Handelsregister).

You can set up only one Eenmanszaak but you can operate under various trade names, perform different commercial activities and work from multiple premises.

As the owner of an Eenmanszaak  you are responsible for everything concerning your enterprise; for every legal act and all its assets and liabilities. No distinction is made between private and business property so creditors are entitled to recovery from your business and personal assets.

You will have to pay taxes on your profits and to pay social insurance contributions (volkverzekeringen). You will be entitled to an AOW pension.

Business with partners

If you are looking to start a business with other self-employed individuals there are three options:

• General partnership (VOF)
• Limited partnership (CV)
• Professional partnership (Maatschap)

General Partnership (VOF) and Professional partnership (Maatschap) will be merged into one entity called “partnership “.

More information about this change is available on https://business.gov.nl/amendment/difference-professional-partnership-general-partnership/   It is not yet known when this change will come into force as both the House of Representatives (Tweede Kamer) and Senate (Eerste Kamer) still need to approve the proposed change.

In a General partnership (VOF) you and your partner(s) are associates or members of the general partnership. Partners are classed as self-employed entrepreneurs. This is one of the most used legal forms and it works very similarly as the Eenmanszaak. See below the general guidelines:

• Each partner contributes something to the business: capital, goods, efforts (work) and/or goodwill. No minimum start-up capital is required
• A partnership contract is not a statutory requirement for the formation of a general partnership, but it is advisable
• An important characteristic ­­­–joint and separate liability of the partners. Each partner can be held fully liable – including private property – if the general partnership fails to meet its obligations. Creditors may seek recovery from your business property and your private property and the property of the other partner(s). Restrictions agreed upon have to be officially registered in order to gain legal effectiveness towards third parties
• Each partner will pay his own income tax on his profit share

A Limited partnership  (CV) is a special type of general partnership (VOF). The difference is that the CV has two types of business partners: general, who are running the business, and limited or sleeping partners who are only financially involved usually as investors; they cannot act on behalf of the partnership. The name of a limited partner cannot be used in the trade name of the limited partnership.

• General partners can be held fully liable if the partnership fails to meet its obligations. A limited partner can only be held liable for the maximum sum contributed to the partnership.

A Professional partnership (Maatschap) is a form of cooperation established by professionals such as doctors, dentists, lawyers, accountants, physiotherapists etc., in order to share the income earned and the expenses. The partners are referred to as ‘maten’ instead of ‘partners’. Each ‘maat’ contributes personal efforts, capital and/or assets.

• Each partner can enter into a contract, thus binding the partnership: all partners. Each partner can be held liable for an equal part. If a partner acts beyond his authorization, the other partners will in principle not be held liable; the partner in question is the only partner that has bound himself
• Creditors having a claim on the partnership can only seek recovery for equal parts from the individual partners
• Each partner pays income tax on his profit share

Legal forms with corporate (legal) personality or incorporated business structures (Rechtvormen met rechtspersoonlijkheid)

Incorporated business structures are also known as legal entities because they require a legal form in the shape of notarial deed. There are five different types:

• Private limited company (BV)
• Public limited company (NV)
• Association (Vereniging)
• Cooperative(Coöperatie)
• Foundation (Stichting)

The Private Limited Company (BV) is the most common legal form under this business structure. It is seen as the entrepreneur, while the person appointed director merely acts on behalf of the BV and cannot be held personally liable (with some exceptions) for his acts. This is. A private limited company can be incorporated by one person – a sole shareholder BV – or by more persons. The capital of a BV is divided in shares.

• There are a number of requirements for the incorporation of a BV which takes place through a notarial deed. The deed should include the articles of association of the company
• The shareholder’s liability is limited to the total sum of his participation. Since the BV is a legal person, having its own independent rights and obligations, the persons involved – directors and supervisors – cannot be held liable for the debt of the company. The company’s creditors cannot seek recovery from the private assets of these officers. A company director or officer may be held liable as a private person if he has acted negligently or culpably
• The BV pays corporation tax, also referred to as company income tax, on the profits earned

business.gov.nl/guides-for-doing-business/starting-a-business-or-carrying-out-an-assignment/general-guide-for-starting-a-business-in-the-netherlands/

The Chamber of Commerce (KvK) has an English language section on its website which provides comprehensive information about setting up and developing a business in the Netherlands. You can also take advantage of the KvK’s Starter Centre to speak with a free advisor. The KvK organises workshops for starters. Information can be found on their website (in Dutch only): www.kvk.nl/evenementen/

The Netherlands Enterprise Agency (RVO) helps start-ups with grants, finding business partners, know-how and compliance with laws and regulations. You find an overview on: english.rvo.nl/topics/startupsandscaleups

The Startup Officers Network comprises officers who work for ministries, large municipalities, provinces and other government organisations and who serve as points of access for start-ups who want to cooperate with the government.

See: www.startupdelta.org/startup-officers/

For information on the Dutch government particular focus on support for innovating and ambitious businesses see:

www.government.nl/topics/enterprise-and-innovation/the-government-supports-entrepreneurs

www.government.nl/topics/enterprise-and-innovation/supporting-ambitious-entrepreneurs-and-startups

www.kvk.nl/english/registration/forms-for-registration-and-reporting-changes/

• Debtors can be granted a six month statutory grace period for paying back their debt. This has to be done by the court.  Keep in mind that the court doesn’t always grant this. During that time creditors cannot claim any money or confiscate any goods. If you are no longer able to pay your debts and you have an Eenmanszaak or are partner in a partnership (maatschap or vennootschap), you are personally liable for your business’s debts. You can appeal to your municipality for debt restructuring. If this fails you can appeal to a court for debt restructuring. For more information: business.gov.nl/regulation/debt-restructuring/
• If you have employees you are expected to follow dismissal procedures. There are various dismissal procedures that you should familiarize yourself with.
• Finally, you will have to file a final tax return. Settling your tax obligations may vary depending on how/why the business is being terminated, whether it is closing down, being sold, or whether it is an issue of family succession or death or divorce.

Closing down

If you are closing down your business you need to report that to the Chamber of Commerce (KvK) which will pass on the information to the Belastingdienst (tax office). They will send you a written confirmation. In case you do not receive it, you need to inform them yourself.

You must also:

• close the accounts of your discontinued business
• file the annual reports and accounts up to and including the cessation date as soon as possible
• make a final calculation and submit a final VAT return

You need to send in final tax returns for all relevant taxes, such as income tax, VAT or any other type of tax. If you have built up a retirement reserve, you need to settle that with your income tax. If you withdraw goods from your business for private use, you must pay VAT on these goods.

Selling your business

If you transfer your business (or a part of your business), you must calculate the discontinuation profit (stakingswinst) and pay income tax on that amount. As well as being relevant for income tax, wage tax and VAT purposes, selling  your business may also have capital gains tax consequences or affect social insurance benefits.

For further details visit the Dutch government website:

business.gov.nl/guides-for-doing-business/closing-down-a-business/guide-for-closing-down-a-business/

 If you are no longer able to pay off your debts, then another procedure applies:

Bankruptcy

You can petition the court to be declared bankrupt. You can do that for yourself or for the company you represent. You do not need a lawyer to submit the application to the court.

 If you have two or more creditors, they can file for your bankruptcy through a lawyer.

All your assets are seized in a bankruptcy. Depending on the legal form of your business, you may also be declared personally bankrupt.

If the court declares you or your company bankrupt, it will appoint an official receiver. That will be the only person allowed to administer your company from the day that you have been declared bankrupt. The receiver can sell your assets and divide the proceeds among your creditors. The receiver can decide whether you have to stop your work at once or at a later moment in time. The receiver can also give permission for certain activities you are allowed to do., for example, concern selling, concluding contracts or paying or collecting bills.

For further details visit the Dutch government website:

business.gov.nl/ending-your-business/bankruptcy/

Registration with the Dutch Chamber of Commerce (KvK Kamer van Koophandel)

Before you are allowed to start your business operations you must register your enterprise in the Dutch Trade Register at the Chambers of Commerce (KvK). Registrations in the Trade Register are public.

All entrepreneurs are required to register with the Chamber of Commerce  (KvK). You qualify as an entrepreneur if you supply goods or services independently with the intention to make profit.

Self-employed without personnel (ZZP) and freelancers also have to register if their business satisfies the criteria for an enterprise. If unsure about whether you need to register your business contact the KvK.

You need to choose the legal form of your business before registering it at the KvK. A checklist of what you need to do when starting your own business is available on https://business.gov.nl/starting-your-business/checklists-for-starting-a-business/how-to-start-a-business-in-the-netherlands-a-checklist/

You should register with the Chamber of Commerce:

• No later than one week after starting your business; OR
• One week prior to starting your business; OR
• Earlier, in which case, the registration (with Chamber of Commerce registration number) will become official one week before the start of your business.

There is a registration fee that cannot be paid in cash.

You can register at the KvK by filling in an online form before you make the necessary appointment that will complete your registration procedure. At the appointment you will receive your KvK registration and VAT number. The appointment can be made online or by telephone.

In principle there is no need to register separately with the Dutch tax office (Belastigndienst) as that is automatically achieved when registering with the KvK. You will receive a VAT-number (btw-nummer) and a KvK number (identification number for legal entities and associations). If you are unsure whether the registration with the Dutch tax office has been done, we suggest you to check it with the KvK officer.

You do need to register separately with the Tax Authority (Belastingdienst) if you are starting a business as a limited company (BV) or a foundation (Stichting), because different criteria are used to establish whether you are an entrepreneur for VAT or income tax purposes.

Licences and Permits

Most businesses operate without permits or licenses, but for some, like the catering business, transport, or a taxi firm, a license is needed. If your products or business operations affect the environment an environmental permit may be required.

Permits and licenses are issued by the municipality or the provincial authorities.

Regulated professions and professional competence requirements

A diploma or permit is usually not needed for starting a business in The Netherlands. There are, however so called regulated professions and professions subjected to professional competence requirements.

A regulated profession is one you can practice only if you meet the professional qualifications established by law. The legal profession is a typical example. The list is long and can be checked here:

ec.europa.eu/growth/tools-databases/regprof/index.cfm?action=regprofs&id_country=10&quid=1&mode=asc&maxRows=*

Professional competence requirements apply to professions, such as: personnel in healthcare and child care, architects and town planners,  financial service providers, bailiffs, bus and lorry drivers, driving instructors, crew of seagoing vessels, security guards and other.

European agreements on mutual recognition of diplomas enable access to regulated professions in member states.

You can have your foreign credentials evaluated by IDW (International Credential Evaluation): www.idw.nl/en/

See comprehensive information at: business.gov.nl/regulation/professional-qualifications/

Memberships

For some businesses/professions it is advisable to register at, or become member of an umbrella organisation. For example, tourism.

A tour operator will find it hard to attract customers without registration at the General Dutch Association of Travel Agencies, (ANVR), which prescribes travel and booking terms conditions, or membership of the Travel Guarantee Fund Foundation (SGR) which guarantees repayment in case of default of the tour operator. Over the years both memberships have become almost a necessity.