The Venootschap Onder Firma (VOF) or General Partnership is a company established by a minimum of 2 members through an agreement registered with the Commercial Chamber (Trade Registry). This entity is commonly translated as “company with partners”. The General Partnership should not be confused with the Professional Partnership which represents cooperations of professionals where the main goal is not the joint performance of business activities.
Main features of the Dutch VOF (General Partnership)
Each of the partners must make a contribution to the common business, e.g. goods, money, labour or knowledge. In contrast to other entities in the country, the VOF is not required to have a minimum capital to operate.
Another important feature of the Dutch General Partnership is connected with the liability of its members. Each involved partner is liable for the company’s debts even when they are created by another partner in the VOF. For this reason, the partnership contract needs to be drafted and concluded in the presence of a notary.
As regards taxes, the contract needs to be submitted to the Commercial Chamber. Each of the partners has to pay income tax with respect to their profit share much like an independent entity. Therefore each partner has separate tax deductions and allowances.
The VOF agreement must state the authority, contributions, shares and resignation arrangements with respect to the profits. It also needs to include a formula for profit allocation. Such contracts can be drafted by a notary or the members of the partnership with the help of a model agreement.
Dutch VOF: Company Liability
The partners in a VOF carry joint and several liability with respect to the debts of the company. If the partnership’s assets are insufficient to cover the debts, creditors have the right to claim its members’ personal assets.
If the partners are spouses with no marriage settlement, creditors have the right to claim the assets of both spouses. If a settlement exists, only the assets of the spouse in debt are considered to fall in the scope of the business. In a business partnership between a husband and wife, both spouses can claim allowances if they undertake to perform equal shares of the tasks.
If you would like to receive further details regarding the Dutch General Partnership, please, contact our local company advisors.
Dutch VOF: Records and accounts
With respect to records and accounts, the Dutch law states that all persons involved in business or exercising independent professions are obliged to keep financial records and accounts and to store documents, books and other information carriers connected to those records and accounts. In a VOF, each partner has to prepare a yearly balance table and a statement of income.
Read here if you would like to explore other company types, such as the sole proprietorship and the private limited company in the Netherlands.