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PRIVATE OR PUBLIC LIABILITY COMPANY (BV VS. NV)

Updated on 4 November 2024

Are you considering establishing a company in the Netherlands? One of your first and most crucial decisions will be choosing between a private limited liability company (BV) or a public limited liability company (NV). While both structures offer liability protection and international credibility, they serve distinctly different business purposes.

The most popular corporate entity in the Netherlands is by far the private limited liability company. Almost all of our clients choose this company type, as it matches well with most business ideas and professional goals.

In addition to the private limited liability company (bv), you can also choose to incorporate a public limited liability company (nv). Although these two legal entities overlap somewhat and have some similarities, there are many noteworthy differences that you should take into account should you wish to establish one of these two types of companies.

We will list all similarities and differences on this page to make it easier for you to make an informed decision about this matter. We will also inform you on how to make the best choice in your particular situation.

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Our professional team has many years of experience in the incorporation of Dutch companies, including the Dutch BV and NV. We will happily help you with all your queries regarding the subject, including extra services such as business registration and assistance with tax returns, for example. We work at standardized and highly competitive rates, making it possible for every foreign entrepreneur to start a Dutch business.

The private limited liability company (Dutch BV)

You can register a private limited liability company in the Dutch corporate tax register, providing you with the option to do business overseas.

A private liability company differs from a public liability company in the way that a private company does not have its stock available for public purchase on the stock exchange.

However, a private Dutch company is still considered a legal entity separate from its shareholders and has its own identity in the eyes of the law for litigation or taxation purposes.

Additionally, private liability companies must also register in the Dutch Trade Register in order to engage in commercial activity.

One of the main benefits of a private limited liability company is its limited liability for directors and shareholders. Only when you can be seen as accountable for certain debts is there a chance that you can be held personally accountable financially. This is also the main reason most entrepreneurs choose the Dutch BV as their company type.

Characteristics of the Dutch BV

The BV is a privately held Dutch legal entity comparable to a ‘private limited liability company’. There are some main characteristics that explain how a BV works and how it differs from other legal entities, which we will list below.

Minimal Capital Requirement

  • Only €1 minimum share capital needed for BV formation
  • Compared to €45,000 for NV

Share Structure

  • Shares require shareholder permission for transfer
  • Multiple share types available (voting/non-voting)
  • Profit sharing can be limited but voting rights required
  • No public stock exchange listing

Ownership & Registration

  • Shareholders listed in company register
  • Foreign or local entities/individuals can be shareholders
  • Transfer restrictions possible
  • Privately held by directors/shareholders only

Financial Protection

  • Limited liability for shareholders
  • Only liable for share capital amount
  • Exception: proven improper management

Governance Flexibility

  • Founders determine paid-up capital
  • Registered in articles of association
  • Different voting and dividend rights possible
  • Simple incorporation process under Dutch law

Tax Benefits

  • Low corporate income tax rates
  • Competitive within EU framework
  • Reduced formation costs
  • Simplified business law requirements

International Accessibility

  • Open to foreign companies
  • Subsidiary structure possible
  • Foreign directors allowed
  • Flexible international structure

Benefits of the Dutch BV

The Dutch BV offers several interesting benefits for entrepreneurs, which is exactly why this legal entity is chosen so often when establishing a corporate entity.

Limited Liability Protection

A Dutch BV provides strong protection for your personal assets. As a shareholder or director, you're only liable for your invested capital - not for company debts. This protection remains valid unless there's proven fraud or improper management.

Holding Structure Benefits

Create a sophisticated business structure by dividing assets and risks among multiple BVs under one holding company. This structure safeguards your assets even if a subsidiary faces financial difficulties. The holding company itself stays protected, allowing you to manage multiple businesses efficiently.

Attractive Tax Framework

Benefit from competitive corporate tax rates: just 19% on profits up to €200,000 and 25.8% above that threshold. Through the participation exemption, some investments can be completely tax-free. This enables strategic reinvestment of profits to grow your business.

Low Financial Threshold

Starting a BV requires only €1 in share capital - dramatically reduced from the previous €18,000 requirement. This low threshold, introduced with the Flex-BV in 2012, makes Dutch companies accessible to both local and foreign entrepreneurs.

Business Growth & Succession

Easily transfer ownership to family members or sell portions of your company. The BV structure simplifies business succession planning and makes partial sales fiscally attractive. Issue shares to attract investors with tangible ownership stakes.

International Reputation

Dutch BVs are globally respected business entities, lending credibility to your operations worldwide. This professional structure is well-recognized and trusted in international business circles, making it easier to establish cross-border relationships.

The public limited liability company (Dutch NV)

There are many steps to forming a public limited liability company, but with the right guidance, these actions are quick and simple.

Furthermore, as a public limited liability company, a portion of your shares will be available for purchase on the stock exchange. Be diligent about how many shares are available on the international stock exchange, as, although rare, some companies have been bought out by random members of the public. This is often achieved via mergers or acquisitions, with an acquisition sometimes being hostile.

In general, it’s wise to handle your assets with diligence. The Dutch NV is also a legal corporate entity and is therefore seen as independent of you by Dutch law.

There are by far more BVs than NVs in the Netherlands, since generally only very large corporations choose to establish an NV. Chances are that the BV is the best choice for your company. Nonetheless, we will still outline all the basic information regarding the Dutch NV.

Characteristics of the Dutch NV

The NV is a public Dutch legal entity comparable to a ‘public limited liability company’. There are some main characteristics that explain how an NV works and how it differs from other legal entities, which we will list below.

Capital & Shares

  • Minimum capital requirement: €45,000
  • Multiple share types available (including bearer shares)
  • All shareholders get voting and profit rights
  • Shares traded on public stock exchange
  • Free buying and selling of shares
  • Transfer restrictions possible

Governance Structure

  • Formation requires notary deed
  • Led by board of directors
  • May need commissioner committee for supervision
  • Sophisticated corporate governance structures
  • Limited liability protection (if formation complete)

Shareholder Management

  • No shareholder listing in Dutch register
  • Can have numerous shareholders
  • Ownership often widely dispersed
  • Transfer of shares unrestricted

Regulatory Requirements

  • Strict disclosure and reporting rules
  • Complex accounting requirements
  • More demanding than BV regulations
  • Subject to securities exchange rules
  • Regular regulatory body oversight

Financial Benefits

  • Competitive EU corporate tax rates
  • Public trading provides liquidity
  • Access to public capital markets
  • Transparency for investors

Key Differences from BV

  • Higher capital requirement
  • Public trading possibility
  • More complex governance
  • Stricter oversight requirements
  • Broader shareholder base

Benefits of the Dutch NV

There are also benefits to owning a Dutch NV, but typically only under certain circumstances do these outweigh the benefits of owning a BV.

Just like a BV, an NV can have one or multiple directors. So, if you wish to start a company alone or with others, both are possible. Since the shares in an NV are not personal, they can be transferred freely.

The NV also offers personal financial protection due to its limited liability, but in the event of improper management, you can still be held accountable.

Next to that, there are several possibilities for tax deduction, such as via investment deduction, through arbitrary depreciation under certain conditions, and via Research & Development deduction.

In general, the NV is only the best choice if you aim for a large public corporation. 

Differences and similarities between the BV and NV

As you can see, there are some factors that are similar within both legal entities, whereas there are also substantial differences.

The public limited liability company is a legal form that is not very common in the Netherlands. There are approximately 2,500 companies that use the Dutch NV company as a legal corporate entity, and these are mainly large companies. This is because it is easier to raise capital (by issuing new shares) as a public limited liability company than as a private limited liability company.

With an NV, just like with a BV, the capital is raised by shareholders. The NV is a so-called capital company (as opposed to a partnership).

The big difference with a BV, however, is that with an NV, the shares do not have to be registered (although it is possible), hence the term “Naamloze Vennootschap” which translates in English to ‘Nameless company’.

This means that shares are easily transferable. The person who can show a share (although this no longer happens physically nowadays) is a shareholder, shares in the profits, and has a vote.

So, in principle, the NV does not always know who its shareholders are. The articles of association determine a large part of the rules regarding the possibility of transferring shares freely in a BV. 

Oftentimes, there are certain transfer restrictions that limit some (or all) shareholders. In such cases, the other shareholders need to give their consent when a shareholder wants to transfer shares.

Also, the other shareholders have a preemptive right to buy shares from a selling shareholder. This is not the case in an NV, where shares can be transferred freely.

Another noteworthy difference is, of course, the minimum share capital required during the incorporation of both company types.

The minimum amount for a BV is only one euro, while the NV requires 45,000 euros. This can make the NV unattainable for many entrepreneurs.

Another main difference is the public vs. private part. The NV can be listed on a public stock exchange, but a BV company only issues private shares.

Furthermore, the Dutch NV is obligated to have a board of directors and has more strict requirements, while the BV only needs a director and a shareholder.

All in all, the Dutch NV is usually only formed by (already) public companies. The BV is much more accessible for a wide variety of entrepreneurs without having to invest large amounts of money, and without the strict regulations that accompany the establishment of an NV.

However, if your company starts growing rapidly and you would like to go public at some point, you are always able to convert your BV into an NV during a later stage of entrepreneurship. 

Private or public limited liability company (BV or NV)?

The Netherlands provides unique advantages for any business to thrive, but it is vital to find the right type of company to suit your needs.

In this article, we made a distinction between a private limited liability company and a public limited liability company in the Netherlands. The main difference between these two, is that there is no distinction between your private and business assets in an unincorporated business.

You and your company are, in essence, the same entity. So, if you create debts with your business, you can personally be held accountable.

If you choose an incorporated business, you separate private and business assets and thus enjoy protection from business debts in most cases, since your business is seen as a separate entity.

Legal requirements differ between the business structures, and there are also quite extensive differences in general requirements for establishment, the way you pay taxes, and the structure of each legal entity.

In general, the business structure that is most often chosen by foreigners is the private limited liability company (Dutch BV) due to the several practical and tactical benefits of this legal entity.

Intercompany Solutions can assist you with the establishment of a Dutch company

If you would like to receive more information on starting a company in the Netherlands, please contact our experienced business advisors. We will gladly offer you the personal advice you need, which will assist you in making the perfect choice for your Dutch business.

We have many years of experience in the incorporation of Dutch companies, making it possible to incorporate and register your new Dutch company in just a few business days.

Furthermore, we can also help you out with a variety of extra services, such as administrative and secretarial assistance, filing of periodical tax returns, legal and general business advice, and many other topics.

You can contact us via the button below, or call us directly if you have any urgent matters to discuss. 

Or read more about the corporate structure comparison in The Netherlands

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