If a group of individuals wants to fulfil a particular goal, for example, all members want to participate in a given sport, make music or improve a shopping area, they have the option to establish an association (vereniging) that is a type of legal entity.
Main characteristics of the Dutch association
- Associations in the Netherlands should have at least two members.
- All association members are entitled to a vote.
- The Members Meeting (Ledenvergadering) has exclusive authority and power.
- The Members Meeting nominates a Committee that includes, as a minimum, a chairperson, a secretary and a treasurer.
Practically there are two forms of associations in the Netherlands, depending on their legal capacity:
1. Full capacity associations
When you establish an association with full capacity (or volledige rechtsbevoegdheid), theoretically, you do not carry personal liability for its debts. However, you need a Latin notary to prepare a deed that states the establishment of the association and its statutes, including:
- name and address;
- objective (profit sharing among partners is not considered an objective);
- requirements for inclusion of members;
- procedure for holding a general Members Meeting;
- procedures for appointment and removal of committee members;
- post-dissolution surplus allocation.
In case you decide to amend any of the above, you need to hire a Latin notary to update the deed of establishment of the association. Associations have internal regulations complementary to the statutes. They concern the practical daily affairs. These internal rules do not need to be notarized.
Associations with full capacity have to be listed in the Trade Registry (Handelsregister) at the Commercial Chamber (Kamer van Koophandel).
Full capacity associations have the duties and rights of public members, e.g. they can borrow money and inherit and own registered property.
Subsidizing organizations usually require subsidized associations to have full capacity in legal terms.
2. Limited capacity associations
An association set up without a Latin notary has only limited capacity in legal terms (beperkte rechtsbevoegdheid) and its owner carries personal liability for all of its obligations. This liability can be limited by registering the association in the National Commercial Registry.
Limited associations are not allowed to own registered property, for example, real estate.
Both limited capacity associations and full capacity association can be used to form a cooperative. Read here on cooperatives in the Netherlands.
Registration at the National Commercial Registry
You are obliged to register your association at the Dutch Trade Registry to obtain full statutory capacity. You carry personal liability until the date of registration. Usually, the Latin notary dealing with the establishment of your association will also complete the registration, but it is advisable to require confirmation.
You have to report any changes in the list of committee members to the Chamber of Commerce in eight days. Former members of the committee continue to carry liability if they are listed in the National Commercial Registry.
Associations functioning as businesses owe corporative taxes (vennootschapsbelasting). All profits have to be directed to the purpose or objective of the association. Depending on the situation, the association may have to charge and pay Value Added Tax.
Liability of committee members
The association is a form of legal entity. Therefore, in theory, the members of its committee do not carry personal liability for its debts. Still, there are exceptions, e.g. in cases of negligence, mismanagement or failure to register the association at the Commercial Registry.
Members of the committee and staff
Associations are free to employ staff. The members of its committee, however, are usually not employees. Therefore they are not covered by any schemes for employee insurance.
Dissolution of the association
Dissolution of the association is possible when the General Members Meeting votes in favor, there are not any members left or bankruptcy is declared. The procedures and rules for dissolution are laid out in the statutes.
All owners of apartments in Holland must be members of homeowners associations (VVE or vereniging van eigenaars). These associations represent the mutual interests of all apartment owners regarding matters of building service and maintenance. VVEs have several obligations. They need to hold at least one members’ meeting per year, to keep reserve funds and prepare yearly financial statements. VVEs have to be listed in the National Commercial Registry.
Do you have any questions about establishing an association or another company type? Our company formation agents can help you open a company in the Netherlands.