Besloten Vennootschap (BV)
A besloten vennootschap, or BV for short, is a special type of company used in the Netherlands, Netherlands Antilles, and Belgium. A BV provides limited liability protection to its owners, which means the owners’ personal assets are protected if the company has financial troubles or legal issues. BVs are often set up in the Netherlands Antilles as “special purpose entities” for international business transactions and tax planning.
Key Features of a BV
Separate Legal Entity
A BV is considered a separate “legal person” from its owners under the law. This means the BV can enter into contracts, own property, and conduct business in its own name. The owners’ assets and the BV’s assets are kept completely separate.
Limited Liability Protection
The owners of a BV, called shareholders, are only liable up to the amount they invested in the company. Their personal assets like houses, cars, and bank accounts can’t be seized to pay the BV’s debts or legal judgments against it. This limited liability is the main benefit of a BV structure.
Management
A BV is run by one or more directors appointed by the shareholders. The directors handle the day-to-day management and decision-making for the company. Shareholders have ultimate control by electing directors and voting on major decisions.
Taxation
BVs are subject to corporate income tax on their worldwide profits. The standard corporate tax rate in the Netherlands is 25.8% as of 2023. However, BVs in the Netherlands Antilles may qualify for reduced tax rates or exemptions due to the Antilles’ offshore tax laws. This makes the Antilles an attractive place to set up BVs for international transactions.
Uses of BVs
Asset Protection
Business owners often use a BV to shield their personal assets from the risks of doing business. If the BV gets sued or can’t pay its bills, the owners’ personal assets are protected. Only the company’s assets are at risk.
Separate Ownership and Management
With a BV, ownership and management of a business can be split up. Shareholders own the BV but don’t have to be involved in running it. This allows for outside investment and professional management of the business.
Tax Planning
BVs are commonly used in international tax planning, especially when set up in tax-friendly jurisdictions like the Netherlands Antilles. Multinational companies may use Antilles BVs to hold intellectual property, finance international operations, or conduct other tax-advantaged transactions.
Joint Ventures and Special Purpose Entities
BVs are often used to set up joint ventures between two or more parties. The BV structure allows the parties to limit their liability, define their roles, and share profits according to their agreement. BVs can also be used as special purpose entities (SPEs) for securitization, leasing, and other structured finance transactions.
Setting Up a BV
Incorporation
To set up a BV, you need to choose a unique name, draft articles of association, and execute an incorporation deed before a Dutch notary. The deed lays out key information about the BV like its name, business activities, shareholders, management, and registered address. You must deposit minimum capital (currently €0.01) into the BV’s bank account.
Registration
After executing the incorporation deed, the notary registers the new BV in the Dutch Commercial Register (Handelsregister). The BV now legally exists and can start doing business. You’ll need to register the BV for taxes and social insurance as well.
Shareholders and Management
The shareholders hold a meeting to appoint the BV’s director(s) and adopt any other initial resolutions, like opening bank accounts. The directors need to be natural persons, not companies. There’s no requirement that directors must live in the Netherlands or Antilles.
BVs vs Other Dutch Business Entities
NV (Naamloze Vennootschap)
An NV is the Dutch equivalent of a public limited company or corporation. NVs can offer shares to the public and be listed on stock exchanges. They require more startup capital (€45,000) than BVs. NVs provide limited liability but have stricter reporting and auditing rules than BVs.
VOF (Vennootschap Onder Firma)
A VOF is a general partnership where two or more partners manage a business together. VOFs don’t provide limited liability – the partners are personally liable for the VOF’s debts. VOFs are easier to set up than BVs but expose the partners to more risk.
Eenmanszaak (Sole Proprietorship)
An eenmanszaak is a one-person business run by a self-employed entrepreneur (ZZP’er). It’s the simplest business form but provides no liability protection. The owner is personally responsible for all the business’s debts and legal claims. Many entrepreneurs start as an eenmanszaak and convert to a BV later on.
