Workshop for Eindhoven Startups Foundation about Starting as a Private Limited Liability Company (besloten vennootschap, B.V.) in the Netherlands Questions? Contact me by: Phone: +31 (0)40 244 42 88 Email: info@dewert.nl Twitter: @jurgenvdsande

1. Starting as
a Private Limited
Company
by
Jürgen van de Sande
30 March 2016

2. Let’s introduce myself
Jürgen van de Sande AA
accountant partner
starting companies and growers SMEs
annual reports, fiscal declarations
finance, structure/organization, acquisition
human resources, dwo and accountancy departments

3. OUR VISION
An entrepreneur’s life is full of important events. Like starting
your company, growing or downsizing, cooperating or ending
your business. Each and every choice you make will affect the
future of your company.
De Wert is your partner of choice. We have been supporting
entrepreneurs since 1959 with accountancy, tax and HR advice,
payroll and administrative services. Therefore, no matter what
phase your company is in: rest assured with De Wert.
Introduction De Wert

4. The first step is the hardest …

5. Little ones grow

6. Sometimes it hurts to let go

7. Program
• General
 Legal forms in NL
 Private Company (B.V.) as legal person
 Establishment requirements
 Share transfer restrictions
 Governance
 Liability
 Annual report, publication and minutes
• Taxation
 Corporate Income Tax
 Wage Tax
 Income Tax

8. B.V.
Which legal forms do we know in NL?
stichting
V.O.F. coöperatie N.V.
and more...
eenmans-
zaak
B.V.

9. Common legal forms
• Sole proprietorship (eenmanszaak)
• General partnership (V.O.F.)
• Limited partnership (C.V.)
• Professional partnership (maatschap)
• Private limited liability company (B.V.)
• Public limited liability company (N.V.)
• Cooperative (Coöperatie)
• Foundation (Stichting)

10. Choice legal forms
• Income tax
• Corporate income tax
• Fully liable
• Limited liability
Tax regime versus Liability

11. Private Company as legal person
• A ‘person’ having rights and obligations
• Incorporation towards third parties
• By one or more persons (shareholders)

12. Establishment requirements
Requirements:
• a notarial deed of incorporation
• Dutch language
• articles of association
• minimum issued share capital € 0,01
• appointing executive board
• registering at Chamber of Commerce
Options:
 priority shares
 preferent shares

13. Share transfer restrictions
• Shares in a B.V. are always on name
• Share transfer restrictions in articles of association
• Deed of transfer executed before a civil-law notary

14. Governance
• Board of directors
• General Meeting of shareholders
• Supervisory board in addition
Board of directors:
 Responsible for managing the B.V.
 Appointed and removed by the shareholders
 Solely or only jointly authorized to represent the company
 Prior approval for certain acts

15. Liability
No liability for natural person (director and/or shareholder)
Directors’ liability:
• In the formation phase
• Up till registration in the Trade Register
• Severally liable by mismanagement
• Discharge from liability
Directors’ and shareholders’ liability:
• Distribution test
 Equity test
 Continue to pay its debts payable (of at least 12 months)
• Reimburse the deficit

16. Annual report, publication and minutes
• Title 9 Book 2 of the Netherlands Civil Code
• NL GAAP
• Annual report
 Management board’s report
 Financial statements
 Other information
• Minutes of General Meeting of shareholders
 Adoption of financial statements
• Publication report
 Deposit to Chambers of Commerce within 8 days after adoption

17. Taxation
• Corporate income tax
• Wage tax
• Income tax
Based on Tax Legislation 2016

18. Corporate income tax (CIT)
Objects
1) Subject to CIT
2) Tax base and rates
3) Dividend (tax)
4) Participation exemption
5) Innovation box
6) Fiscal unity

19. Corporate income tax (CIT) #1
Subject to CIT
• CIT is charged to legal entities of which the capital is partially or fully
divided into shares
• Examples of such legal entities are the Dutch N.V. and B.V.

20. Corporate income tax (CIT) #2
Tax base and rates
• CIT is charged on the taxable profits earned by the company in any
given year less the deductible losses.
• Deductible losses
 1 previous year
 9 subsequent years
• The following are the applicable corporate income tax rates for
2016:
Profit from Profit up to and including Rate
€ 0 € 200k 20%
> € 200k 25%

21. Corporate income tax (CIT) #3
Dividend (tax)
• Pay out profits to the shareholders
• Tax rate is 15%
• Advance tax payment on CIT and income tax

22. Corporate income tax (CIT) #4
Participation exemption
• To prevent double taxation
• Profit distribution between group companies is exempted from tax
• At least 5% of the nominal paid-in capital of a company is required

23. Corporate income tax (CIT) #4
Participation exemption
• Example
• Subsidiary B.V. pays out € 50k dividend to Parent B.V.: without
participation exemption this benefit would be taxable for Parent B.V.
100%
Parent B.V.
Subsidiary
B.V.
dividend € 50k

24. Corporate income tax (CIT) #5
Innovation box
• For innovative activities
 Patent
 Research and development project (WBSO)
• CIT rate for innovative activities
 5%
 Option to declare 25% of the total profit limited to € 25k for 3
years
• Losses on innovative activities can be deducted at the normal CIT
rate

25. Corporate income tax (CIT) #6
Fiscal unity
• Companies effectively established in NL
• Same tax regime
• Same financial year
≥ 95%
Parent B.V.
Subsidiary
B.V.

26. Wage tax
Salary director/shareholder
• Usual wage settlement (article 12a Wage Tax)
 A minimum wage of € 44k applies for employees with a
substantial interest in the employer
 Not applicable when the usual wage is less than € 5k per year
• Others have a higher wage?
 75% of that higher usual wage, but at least € 44k
 The salary of the highest-paid employee
• No profits to pay € 44k salary as a startup?
 Request for a decision “reducing usual wage”

27. Wage tax
Salary director/shareholder
• Social security?
 Depends on the relation of authority
 director and/or spouse ≥ 50% votes
 director and/or 3rd degree ≥ 2/3 shares
 director cannot be dismissed against his will
 Without a relation of authority the director/shareholder cannot
rely on the social security insurances
• Advance tax payment on income tax

28. Income tax
Boxes
Box I: Taxable income from work and home
Box II: Taxable income from substantial interest
Box III: Taxable income from savings and investments
(no further explanation)

29. Income tax: Box I
Taxable income from work and home
• Income from current employment
 Employment with the B.V.
 Salary director/shareholder
• Income from providing of assets towards the B.V.
 Building: rental income
 Loan: interest income
 Exemption 12%
• Tax rate is progressive to a maximum of 52%

30. Income tax: Box II
Taxable income from substantial interest
• Minimum of 5% of the issued capital of shares
• Regular benefits and/or sales benefits
 Dividend
 Sale of shares
• Tax rate is 25%

31. Starting as
a Private Limited
Company
So … why?
• Splitting liabilities and risks
• Flexibility in operations
• Facilitate attracting and distributing funding
• Sale of spare parts
• Acquire new subsidiaries
• Increase opportunities of continuity

32. Questions?