Things you need to know about the Dutch BV

In The Netherlands, several sorts of business entities are possible. A business entity is a legal form a corporation needs. Amongst the possibilities are a proprietorship, a limited liability company, and a partnership. Another option is a private company, a ‘besloten vennootschap’ or ‘bv’ in Dutch. But what exactly is this private company, and what do you need to know about it?

Closed

The direct translation of a ‘besloten vennootschap’ is a closed partnership. One of the characteristics of the bv is that the company is divided into shares, which are owned by shareholder(s). These shares are not freely transferable or tradable; hence, the name ‘besloten vennootschap’. In the bv, shareholders hold power, and directors manage the enterprise. The bv could have a supervisory board supervising the management. However, with smaller companies, the director is often the only shareholder. When the director owns more than 5 percent of the shares, this person is called the director-major shareholder (DGA).

Moreover, the bv carries its own rights and obligations and is therefore a legal entity. The owner is employed as a director of the BV and acts on behalf of the company. This means that when debts occur, the company is often liable instead of the owner (KvK, n.d.).

Liabilities

As said before, the director usually is not liable for debts; the company is. However, it is vital to know that when the director owns more than 5 percent of the shares (DA), many banks will let the director co-sign loans so that the director is liable him-/herself. Moreover, the DGA could be personally liable if anti-abuse legislation is not followed. Examples of this could be that the DGA enters contracts that are too heavy, and the bv could have foreseen this, or the bv cannot pay taxes and has failed to report this to the tax authorities (KvK, n.d.).

Let’s get in touch!

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