What you need to know about the flex-bv

Since October 1, 2012, it has been easier to set up a private limited company. Due to the simplification of the rules, a BV is also referred to as a ‘Flex BV’. Here is our overview of what has changed since the introduction of flex-bv and what the benefits could mean for you.

Are you going to start your own company? You can choose different legal forms. In the past, many start-up entrepreneurs were excluded from starting a private limited company (BV) due to the stringent set-up requirements. Fortunately, this is no longer necessary after the amendment of the law of 1 October 2012.

The advantages of a flex-bv

The BV is a legal entity. This means that in the case of debts you are not personally liable for these costs (such as in the case of bankruptcy), but that they remain with the BV unless you acted negligently or fraudulently. Shareholders are only liable for the amount they have invested in the BV. The BV stands on its own: there is continuity. If something happens to you, your company can simply continue to exist. However, a new director must be appointed. If you want to sell your company or retire, you simply sell your shares to the new owner.

If your company has a high profit, the corporation tax that you have to pay if you have a BV is lower than if you pay tax if you have a sole proprietorship or partnership (VOF). A BV has a clear organizational structure.

Applying for a loan:
Note: if you are a director-major shareholder (dga), you often also have to sign for private liability when taking out any loans. As a result, you are still privately liable for the repayment of the loan.

How to convert your company into a bv:
Have you been turning a profit with your sole trader, VOF or partnership for some time? Then it can be beneficial to convert it to a BV. This process has also become simpler since the arrival of Flex BV.

You use the services of a notary for a deed of incorporation. They will draw up your articles of association and let the Chamber of Commerce and the Tax Authorities know that your legal form has changed. It can be that simple. The new year is a good time to do this. You can then close your financial year with, for example, a sole proprietorship and continue with a company. There are no two legal forms mixed up.

Minimum Salary directors / owners 

If you are the owner of a BV, you are most likely also the director of a major shareholder (DGA) (unless one of the other shareholders in the BV is). You are then obliged to give yourself a usual salary of € 45,000 (in 2018). This can be reduced if you can demonstrate as a starter that you do not have the resources to pay such an amount to yourself. Submit this application to the tax authorities. You can often reduce your salary to the minimum wage. In practice, it often comes down to taking a wage for a certain amount of the profits.

This rule is only applicable to persons who are both a shareholder, of relatives of a major shareholder in combination with being a director.

What do you need for a flex-bv?
A notarial deed of incorporation;
Registration of the BV in the Trade Register of the Chamber of Commerce (KvK).

The main changes

• The required starting capital of at least €18.000 is no longer required. A company capital of 1 euro is enough. (Although, it might be recommended to put a bit more).
• You no longer need a mandatory bank and accountant statement for the establishment.
• You have more freedom to organize the statutes. What must be included in the articles of association: the company name, place of business, purpose of the BV, the share capital and an arrangement for the directors and/or supervisory directors who suddenly disappear (for example due to illness or suspension). You should not deviate from this.
• You may issue shares without voting rights or without the right to a profit distribution (dividend). This can be useful, for example, when issuing shares to employees, family members or financiers.
• You may take decisions outside the general meeting. This allows the BV to act faster. Especially if there is only one director-major shareholder (DGA).
• You may decide to limit the transfer of shares. Previously, if one of the shareholders left the BV, the shares had to be offered to the other shareholders before you could sell them to someone else. That statutory blocking scheme has been abolished.
• You can change your statutes more easily; even if the BV has been established before.

The rules for a flex-bv

The flex-bv deletes several measures that were intended to protect creditors, including the minimum starting capital of eighteen thousand euros. It has been replaced by provisions that still protect creditors.
If you threaten to no longer be able to pay your due debts, you may not pay a dividend.
If you act carelessly, you can be held personally liable for the debts incurred. In addition, the laws to combat bankruptcy fraud are being tightened.

Read here for more information on incorporating a Dutch BV.

Entrepreneurs are invaluable. They are the engine of the Dutch economy. We owe our jobs, prosperity and opportunities for development to a large extent to creative self-employed persons, innovative startups, proud family businesses, global companies and a large, varied and robust small and medium-sized company.

Space for entrepreneurs

Legislation and regulations are being modernized so that companies can better respond to social and technological changes with their services and products. Regulatory pressure and administrative burdens are limited, for example by expanding the current business effects test with an SME test.

The various inspections will cooperate better so that better enforcement is associated with fewer administrative and supervisory burdens. Appropriate rules and more space will be created for companies with social or societal goals while maintaining a level playing field. The possibilities for regional and sectoral pilot projects, legal experimental space, test locations (for example for drones) and rule-free zones will be increased. Minimum requirements and appropriate supervision apply.

In order to take advantage of regional opportunities, the national government seals 'deals' with decentralized authorities, in which the parties undertake to work together on new solutions.

Strengthening innovation

In vocational education, professionals, technology and craft are given priority, revaluation and a new impulse. The Technology Pact and the Beta Technology Platform will be continued.
The cabinet invests 200 million euros a year in fundamental research. In addition, 200 million euros per year will become available for applied research. This includes an extra investment at large technological institutes that demonstrably meet market needs and public-private partnerships at universities and colleges with a focus on beta and technology.

Credit and banking sector

The cabinet is continuing the establishment of a Dutch financing and development institution, InvestNL, in accordance with the set-up that has already been started with three main objectives (see Parliamentary Paper 28165-nr266) and is making 2.5 billion euros available as equity.
Financial technological innovations (Fintech) contribute to innovation and competition in the financial sector. The entry of these innovative companies is simplified by introducing lighter banking and other licenses while ensuring sufficient protection of the customers.
Well-capitalized banks are crucial for lending. As soon as the stricter requirements of Basel IV come into force, the requirement for the leverage ratio is brought into line with European requirements.

A level playing field for entrepreneurs

An open economy is difficult to relate to the barriers that Dutch entrepreneurs too often encounter in other countries outside the European Union. This also applies to foreign companies that are (partly) state-owned or that benefit from state aid. The Netherlands wants to make agreements at European level and with third countries for a better balance.

To prevent improper and unwanted competition between governments and private parties, the general interest provision in the Market and Government Act is being tightened. For activities that are developed by governments and that are otherwise not or insufficiently offered by market parties, such as sports, culture, welfare and reintegration services, there remains a possibility to provide these by governments.
Additional franchise legislation will be introduced to strengthen the position of franchisees in the pre-competitive phase.

A competitive business climate

We want the Netherlands to be a country where it is attractive for companies to settle and from which Dutch companies can trade all over the world. The Netherlands benefits from this because these companies add employment, innovation and strength to our economy. Many people work at internationally operating companies and at companies that supply them. The Netherlands is an attractive country of residence for many internationally operating companies. Measures are needed to keep it that way in an increasingly globalizing world.

Read here for more information on registering a company in the Netherlands.

The first thing you need to do is to register your company with the Trade Register via the Chamber of Commerce. Your company information will be automatically transferred to the tax authorities.

When registering the BV with the Chamber of Commerce you will receive an RSIN number. This number is also on the extract of the Chamber of Commerce. This RSIN number becomes the fiscal number of the BV. The VAT number is derived from this number, namely with the addition NL and B01 at the end. However, this number must be activated, and we can perform this process for you.

To assess whether the BV is an entrepreneur for VAT, the following matters are taken into account:

A taxable person for VAT is any person who, in the pursuit of economic activity, provides, regularly and independently, for-profit or not, a supply of goods or services, wherever the economic activity is carried on.

The definition includes 4 essential elements:

Everyone:
Natural person, legal person or associations insofar as they carry out economic activities

Economic activity:
All activities of the producer, trader or service provider are envisaged (except for exempt transactions).

Regularly exercised activity:
To be a taxable person, the transactions listed in the Code must be performed by him/her regularly. Only through succession do actions become an activity. The regular occurrence of the actions in the form of an activity is not clearly defined.
Determining whether an action is part of a regular activity or of an accidental nature is assessed on the basis of the facts.

Independent:
The activity must be carried out on an independent basis and not in employment. There should be no bond of subordination to another person.

The criteria the tax office uses for VAT assessment can include:

• The company activities (and it’s risk for potential VAT misuse)
• Where is the company buying their goods?
• Where is the company selling their goods?
• Does the company have any activities in the Netherlands?
• Does the company have any staff, directors or operations in the Netherlands?
• Where is the company marketing itself?

If the BV meets the tax inspector assessment, there is a tax liability for VAT, and the Tax and Customs Administration will issue a VAT number. This international VAT number is crucial for international transactions with other legal entities within the EU since a valid number leads to an invoice without VAT. (a so-called intra-community transaction). It is also important to always check the validity of the VAT number of your counterparty since the normal VAT rate applies if the number is invalid. The VAT number can be checked using the European Vies VAT number validation website.

Where to use the VAT number?

Foreign citizens and businesses, as well as local citizens who apply for a VAT number with the Dutch authorities, must display this number on every invoice they provide. They must also file VAT reports with the local tax office. All invoices are required to include certain information about the VAT, such as:

The VAT number of the client;
The VAT ID number of the seller;
Information about the items/services sold;
The amount of VAT (net);
The VAT rate;
The amount of VAT charged;
The total amount including VAT.

In conclusion

The whole process of applying for a VAT number can be completed within 5 working days. Our accounting and VAT specialists file- and consult hundreds of such VAT requests per year. Our specialists ensure the best possible service to represent your company with the tax authorities.

You should also be aware that if your company is dissolved, you must also contact the tax authorities as the VAT number must be deleted and the company will be de-registered.

Would you like to start a business as an expat? The Netherlands is an ideal place for entrepreneurs. There are numerous market opportunities and a healthy economy with plenty of potential investors open to new ideas.

However, the Netherlands is also known for the a number of administrative procedures that you have to consider when starting your own company. To set up a business in the Netherlands, for example, one of the first things you need to decide is if you want to register and operate the company remotely. Or if you want to work and reside in the country.

If you are from a country not from the EU, EEA, Visa free travel country, you might need to apply for a business visa to come by. For long term residency you might need to apply for an Authorization for Provisional Residence, and possibly even a work permit or TWV. When completing the application, keep in mind that your proposed business must benefit the Netherlands in some way.

Legal forms

The next step is to decide which legal form is right for your company. It is essential to choose a structure with the appropriate legal form as this determines liability for tax purposes. ICS can help you with this process. Generally foreign entrepreneurs are best suited to start a Dutch BV company.

BV or Sole Trader (eenmanszaak)

Freelancers living in the Netherlands, often choose the sole trader structure. However, the most frequent option for professional small and middle sized businesses is a the BV, which is a limited liability company. The advantages of the Dutch BV for foreign entrepreneurs are:

• You can open a BV remotely with our services
• You can operate a BV from anywhere in the world
• You can request a bank account remotely with our services
• It is a very common structure for foreign entrepreneurs in the Netherlands
• You do not need an address in the Netherlands
• You do not have to be a resident to open the BV
• You do not need a residence permit or visa
• You do not have a minimum requirement of time you need to spend in the Netherlands
• You can open it before you live in the Netherlands (and run it remotely)

For the Sole Trader (Eenmanszaak)

• You need to live in the Netherlands
• You cannot run it completely remotely, as you are required to stay in the Netherlands more than 50% of the year
• You need to have a Dutch fiscal identification number and Dutch residence address
• You cannot open it before you live in the Netherlands

Registering your company at the Chamber of Commerce

Once you have decided the kind of business you wish to set up, the next thing you need to do is to register the company with the Chamber of Commerce, which is mandatory. Registration must occur from one week before the start of business to one week after work has commenced.
Very soon after your business is registered with the Chamber of Commerce, you will be issued with a unique company number or the Chamber of Commerce number. It is a statutory requirement to include this number on all company invoices and mail.

Dutch Corporate Tax

As well as registering with the Chamber of Commerce, your fledgling business must additionally be registered with the Tax Authorities. We recommend registering as soon as you can in order to claim a VAT deduction. ICS is specialized in tax registration for foreign business owners.

What about Dutch VAT?

When customers are invoiced for your services or when they pay you for your products, you will need to add an extra 21% VAT tax to your rate.
The VAT return must be calculated every quarter and paid directly to the tax authorities. However, VAT may be deducted from VAT spent. VAT is not a cost for the entrepreneur, it is only a cost for the end consumer.

Vat is not the only tax.
Entrepreneurs in the Netherlands will at least encounter some of the following taxes.

• Corporate tax, this tax is paid upon the company profit after all company costs.
• Income tax, this is tax on salary that an individual pays when receiving income. Income tax includes tax on dividends, wages and bonuses.
• Payroll tax, this is the tax that company owners pay on top of the salary to the government.

Why does the Netherlands have Payroll tax?
With the payroll tax, costs such as health insurance and unemployment benefits for every resident is covered. Every tax paying resident of the Netherlands has the right to these benefits.

Business Administration

In the Netherlands, businesses must keep business records. Every business owner is legally obliged to keep them for at least 7 years. If you close your company, your accountant or bookkeeper is required to hold the documents for you. The bookkeeper will be legally appointed as the custodian for your records.

The business Administration includes:

• Contracts and agreements
• Costs of business activities
• Invoices sent and received
• Your balances and bank statements
• Annual accounts
• VAT and tax filings

Dormant company accounting

The Netherlands does not have a type of dormant company. If your firm is inactive (little or no invoices), you can request your accountant for the VAT filings and Payroll tax to be halted. However, you are still legally required to file the end-of-year corporate tax filing, the board to sign off on the numbers in an official declaration and depositing of the annual statement in the Chamber of Commerce. ICS does offer special accounting prices for firms with no activities. Please ask one of our accounting specialists for more information.

Insurance and pensions

As an entrepreneur, you are prepared to take risks and you may have plenty of responsibilities.
It is advisable to take out insurance to protect you against risks and to guarantee an income if you are unable to work in the future.

In the Netherlands, entrepreneurs are liable for personal injury and material damage that you, your employees or your product cause on your behalf. Business liability insurance is, therefore in some more risky type of business categories (construction and so on), essential to reimburse the damage that your company may cause to others. Another frequently used insurance is disability insurance which assures you of an income if you are unable to work because of ill-health.

Health insurance is mandatory for everyone in the Netherlands. As an entrepreneur, your contributions are based on your taxable income. Legal assistance insurance is also recommended as conflicts may occur, whether with clients, employees or suppliers. This type of insurance guarantees help and advice on legal issues.

In September 2019, the government of the Netherland announced bad news for large companies in the form of 1.5 billion more tax.
Very large companies will have to pay more tax in the coming years. A number of advantageous schemes for large companies are being revised and an intended tax cut is not being made.

This is evident from the Tax Plan, which is part of the Budget Day documents. The biggest blow to large companies and the biggest blow to the tax authorities is reversing an intended reduction in profit tax.

Profit tax reduction will be reduced

The government planned to reduce the tax rate for corporate profits above 200,000 euros from 25 percent to 21.7%. The lower tax rate is set to decrease to 15% in 2021.

The ministry estimated that this change in policy will benefit large companies nearly 1.8 billion euros next year, on the other hand, this means less income for the treasury that was not previously expected.

In 2021, the higher rate of the corporate income tax will drop to 21.7 percent, but it was previously planned to drop to 20.5 percent. This smaller reduction means that from 2021 the Tax and Customs Administration will structurally receive 919 million euros more income from profit tax than previously estimated. (Currently the rates are 19% for the lower rate and 25,8% for the upper rate as of 2024).

More setbacks: innovation tax and Groenlinks law

However, that is not the only setback for large companies. More setbacks are planned from 2021 onwards. Corporate profits achieved through new innovations are now taxed at 7 percent, that rate goes up to 9 percent. This is expected to generate 140 million euros more annually for the state.

And the cabinet is accepting a proposal from Groenlinks, whereby companies such as Shell can no longer deduct unrestrained foreign losses resulting from the closure of a subsidiary from the tax owed in the Netherlands. In 2021 this will generate additional income of 38 million euros for the state, but in time this will yield 265 million a year.

A disappointment for Multinationals: the loss of the VPB discount

And with that, the poisoned chalice for companies is not yet completely empty. The discount that multinational companies now receive if they pay their corporate tax in advance at once, after they have received a provisional assessment, will also disappear. As a result, companies are estimated to miss out on around 160 million euros a year in discounts.

As a result of these measures, the burden on business will increase structurally by almost 1.5 billion euros. That money is used to pay for part of the tax relief for citizens.

For the latest advice on taxation for multinational companies in the Netherlands, contact Intercompany Solutions whoo are on hand to answer any tax-related questions you might have.

If you wish to set up a company in the Netherlands, you can opt for "private limited liability company", also known as a BV. This legal entity is comparable to the Belgian BVBA. You can have a number of motives for establishing a BV.

Why should I use a Dutch BV?

Although you can also do business with your Belgian BVBA across the border, a Dutch BV, which has a business address in the Netherlands, can give your local customers, business partners and employees just a little more confidence in your organization. And once you operate in the Netherlands, you will soon have to deal with Dutch regulations.

The advantage of a BV is that it is a legal entity so that it can participate in legal transactions under its own name and can thus conclude a purchase agreement itself.

At a BV continuity is guaranteed because death or bankruptcy of a director or shareholder has no consequences for the survival of the company. The shares in a BV can also be transferred relatively easily.

And vice versa: the director and shareholder are - in principle - not liable with their private assets for the debts of the BV or, for example, in the event of bankruptcy of the company. A BV has equity from which creditors can recover. However, please note that under Dutch law a director can in certain cases be held liable for debts of the company.

How do I set up a Dutch BV?

A BV is only possible with a notary and this cannot be deviated from. A notary draws up a deed of incorporation of which the articles of association of the BV to be part of. The articles of association are the basic rules and in any case contain information about the name, purpose, seat and shares (including who will receive shares and the price of the shares).

In Dutch law, many provisions state that the main rule can be deviated from in the articles of association. You can use a BV as you wish within the limits of the law.

From the moment that the notary public passes the deed of incorporation, the BV must be registered in the Trade Register of the Chamber of Commerce. In general, the notary takes care of that registration.

The Shareholder Agreement

If you have more shareholders, you can draw up a shareholders' agreement, preferably prior to the establishment of the BV. Here you can lay down agreements that are not included in the deed of incorporation (the articles of association) or that require further elaboration, such as that shareholders may not compete with each other, regarding the exercise of voting rights, when the shares may be transferred to a third party (or must be offered to the other shareholders) and the board decisions that must first be submitted to the shareholders for approval.

You can make the shareholders' agreement as extensive as possible if you wish, but this must be in line with the deed of incorporation.

The management agreement

It is often recommended that the rights and obligations of the director(s) vis-à-vis the company be laid down in a management agreement. This may include arrangements regarding, among other things, the management and expense reimbursement of the director, the decisions that the director must first submit to the shareholders for approval, non-confidentiality and non-competition agreements, the core duties of the director and the way in which the director must carry out work.

If the director is a natural person, he or she may be qualified as an employee under Dutch employment law. If that is the case, it has employment law and tax consequences. A management agreement often stipulates that the director is not regarded as an employee, but as a contractor. But whether there is a pure contract or an employment contract, that is determined by Dutch law; the name of the contract is inconclusive. More information about Dutch employment law can be found here.

Is a minimum capital required?

When establishing a BV you do not have to pay a mandatory minimum capital. You can set up a BV with a capital of one euro cent.

The Netherlands is one of the ten largest exporters in the world. The food industry is one of the largest industries in the country, while other vast industries are: energy, chemistry, negotiation, machinery, metallurgy, electrical commodities plus sign services, plus sign foreigners.

1. Agriculture

The Netherlands is one of the world's largest exporters of food products plus agricultural products, thanks to the highly mechanized agricultural sector plus innovative agro-food technology, the promising geographical location in the heart of Europe, the mild weather plus the flat fertile floor.

The Dutch agro-industry focuses on international export is laundry before almost 21% of the country's total export value. The Netherlands is in the first position in the European Union (EU), provided that it is in second place in the world, after the United States (US), due to the export of agricultural products.

The agricultural industry provides employment to 4% of the Dutch workforce plus produces vast remnants before the food plus processing industry. One part of the food plus agricultural products exported from the Netherlands includes tomatoes, peppers, cucumbers, apples, flowers, and flower bulbs.

Open a food or agricultural company in The Netherlands 

2. Energy

The energy industry in the Netherlands is one of the main export products of the country plus sign, provided that the source of employment is plus sign patriotic income.

As estimated, 25% of natural gas reserves in the European Union (EU) are located in the Netherlands. Expansive natural gas supplies were discovered in the Netherlands in 1959 and have generated significant revenues for decades. The Netherlands has had no other mining resources since the closure of the coal industry in 1974.

The Groningen Gasveld, situated during Slochteren, is one of the largest natural gas fields in the country.

More information on opening an energy company in The Netherlands.

3. Chemicals

The chemical industry in the Netherlands is one of the most important economic sectors in the country.

• The country is home to the headquarters of 19 of the world's foremost multinational chemical companies, including Royal Dutch Shell, DSM, AkzoNobel and BASF.
• The Netherlands is home to research institutions such as the Netherlands Organization before Applied Natural Sciences Research (TNO) plus numerous universities.
• The country is also one of Europe's leading suppliers of chemical products and services. The extensive transport network in the Netherlands makes raw materials easily accessible.
• The chemical industry focuses on developing smart materials and solutions in five areas: health care, energy, food security, and many more.

It's clear that with an advanced and healthy economy across a range of sectors, the Netherlands is an inviting prospect for foreign entrepreneurs. Contact ICS who can help guide you through the inevitable red tape that surrounds starting up a new company in the Netherlands.

Read here on starting a chemical company in the Netherlands

In the last years, researchers and startups in The Netherlands started innovating in cryptocurrency, Quantum Computing, Artificial Intelligence and alternative energies.

A 'no deal' Brexit is looking more and more likely with both sides at a stalemate and the UK set to crash out of the EU on 31st January 2021. This means that an increasing number of businessmen are feeling anxious and uncertain and looking for new havens, and the Netherlands is especially popular, despite the recent measures introduced by the Dutch government to combat tax evasion by multinationals. And this number is predicted to become significantly larger as another 325 companies and organizations are actively considering moving to the Netherlands in the near future.

The increase is most clearly visible in the financial media, biotech and IT sectors. Companies in these sectors are mostly drawn to Holland due to the excellent employment market in combination with lenient financial opportunities and permits. It’s not just UK companies that decide to settle here: a large Japanese bank like Norinchukin and the American CBOE also made the same decision.

Not every company is ready to take action just yet

Many UK companies are still a tad hesitant because it is still very unclear how Brexit will take shape and what the exact effects will be on the business community. It might pose some risks for your company though if you do not consider at least one branch office in an EU country before an eventual hard Brexit goes into effect. This surely might have consequences, such as:

A substantial delay in all business activities due to obligatory border formalities and the necessary documentation you will need now. You will no longer be able to take part in the free EU market, this will make much more difficult to hire freelancers or buy and sell products from and to other countries in the EU.

You can pretty much count on establishing a backlog in your services very fast due to all the new requirements and paperwork. You are at risk losing clients from all over the EU, simply because it will be easier for them to find a competitor who is still based in the EU.

Intercompany Solutions can help you avoid such consequences

The list is much longer than this, as every single business will be subjected to certain extra disadvantages linked to a specific sector. If you want to avoid such consequences, it would be wise to consider opening a branch office in Holland. Intercompany Solutions can realize this for you in just a few business days, plus you won’t even need a physical location immediately as it is also possible to establish a subsidiary or branch office. Please feel free to contact us anytime with questions, we will try to assist you in every possible way we can.

Intercompany Solutions gets Brexit related requests on an almost daily basis currently and has assisted many companies to make the transition.