ENTREPRENEURSHIP

Besloten vennootschap (bv) in the Netherlands

Table of contents

A bv is a Dutch legal entity with limited liability. A bvas a legal form has several advantages. Learn more about them here.

A bv is a legal entity with limited liability. A bv also stands for besloten vennootschap. The designation ‘besloten vennootschap’ means a fixed group of shareholders. Within the bv, the capital is divided into shares. Share ownership is shared by the shareholders, who jointly own 100% of the shares.

Liability

The bv is a legal entity and this means that the owner is not personally liable for possible debts of the bv. The main advantage of a bv is that shareholders are protected against financial risks. The maximum amount shareholders can lose in case of bankruptcy is the nominal value of the shares they own in the company. This always leaves a boundary between personal assets and company finances. However, if there is mismanagement, negligence or fraud, owners can be held personally liable.

Conditions for setting up a bv

Setting up a bv is a bit more complicated than a sole proprietorship. To establish a besloten vennootschap several conditions must be met, namely:

The establishment of the bv must be done through a notary by notarial deed. This notarial deed contains the articles of association that state, among other things, the purpose of the company.
A minimum capital of €0.01 must be deposited.
The board has the task of registering the limited liability company in the Commercial Register at the Chamber of Commerce. Until this is done, the board is personally liable.

Advantages and disadvantages of a besloten vennootschap

A besloten vennootschap (bv) has both advantages and disadvantages. We have listed these for you.

Advantages

The biggest advantage of a bv is that as a director, you are in principle not liable for damages and debts of the bv. With a sole proprietorship, however, you are always fully liable for these, even with your private assets.
Shares in a bv are easily transferable. Through a share transfer, you transfer all debts and assets at once. With a sole proprietorship, this is much more complex.
You can be a director, shareholder and founder of a bv yourself, but these can also be different people. This way, you can divide the tasks and don't have to do all the work yourself. Pretty convenient!
If you start making more turnover in a bv, you will pay a lower tax rate (the corporate income tax). From about €80,000 net profit per year, the bv is more attractive from a tax point of view than a sole proprietorship. You can also make use of certain deductions, such as the investment deduction or the innovation box (stimulating innovative research).
With a besloten vennootschap it is possible to hire staff.
A bv appears more professional compared to a sole proprietorship, as it is a legal entity created according to criteria regulated by law.

Disadvantages
A limited liability company can therefore be an attractive choice. However, there are also disadvantages to this legal form.

The costs of establishing a bv, as well as the annual accounting costs, are generally higher than for a sole proprietorship, for example.
A bv faces more rules and obligations, such as preparing financial statements, maintaining shareholder registers and holding shareholder meetings.
The tax rules for bv's are more complex than for other forms of enterprise.
You cannot claim the self-employed deduction, start-up deduction, SME exemption or Dutch Small Businesses Scheme.

Shareholders of a bv

The capital of a bv is divided into shares, which are held by shareholders. The supreme power within the bv lies with these shareholders. If you are only a shareholder and not a director, your liability is limited to the amount with which you participate in the company. Annually, the board must prepare financial statements and publish them in time in the Trade Register. The general meeting (of shareholders) must approve the financial statements. Late or incomplete publication may lead to directors' liability.

Taxes bv

In 2024, a bv pays corporation tax on profits, divided into two brackets: a lower rate up to €200,000 and a higher rate for profits above that. In addition, a director-major shareholder (dga) must pay himself a regular salary, on which wage tax is levied. Dividend payments may also be subject to substantial interest tax. These tax obligations require careful planning and administration. Read our blog on taxes at a bv for a complete overview of the tax rules.

Holding bv

The holding company, like the bv, is a partnership. There are many misconceptions about different types of bv's. A holding bv, a work bv, management bv, savings bv, etc. These are all bv's, it is only the objective that is different. The difference between a bv and the holding company is that the holding company is a passive holder of shares in a bv. A holding company is used as a vehicle to hang underlying bv's under. This offers legal and tax advantages. By housing the valuable assets in the holding bv, they are shielded from bankruptcy. The real business is always done from the work bv, of which the holding company holds the shares. The work bv therefore also houses the risks.

Personal and expert advice bv

Do you have questions about the bv or other forms of enterprise? We have the necessary knowledge and experience in setting up a bv, holding company structures, directors' liability and more. Then feel free to contact us without any obligation.

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