Entity and Structure for Businesses in the Netherlands
When starting a new company, founders should first select the preferred legal business structure:
Besides that there is the foreign branch. The latter has been out of fashion and is hardly seen as a serious legal form.
Finally, in case of a foreign company importing into the EU through the Netherlands, a fiscal representative (in combination with an article 23 license) can be a good alternative to an entity setup.
Most foreign entrepreneurs choose a BV. This Dutch legal form is the equivalent of the, German GmbH, the UK Limited company, the Norwegian AS and the Swedish AB.
Besides these entities exists the NV, comparable to a public liability company (or US Corporation). This is a very rare legal form in the Netherlands and not typically recommended.
Which legal structure is right for me?
For most for-profit organizations, the BV is the top choice due to its flexibility and tax advantages. Other advantages are that the BV is investor-friendly and the most transparent way of working together with co-founders.
A foreign entrepreneur in the Netherlands has roughly three options:
- Either he has an existing entity abroad that will function as the mother company of the Dutch daughter company,
- Or he sets up a single BV with himself as the main shareholder.
- A third option is the so-called BV holding structure. This means in effect that the founder sets up two BV entities, a holding BV and an operating BV. The owner holds the shares in the holding which in turn holds the shares in the operating BV. This is the same setup as the Norwegian AS holding structure.
If the Dutch entity will not be a daughter company of a foreign entity, then the BV holding structure is usually the most plausible way to structure the company.
Let's take a small consulting business that wants to relocate to the Netherlands and will employ a small team. There is one shareholder and director. In the future, new partners or investors might come on board.
In this case you can either set up one BV or a holding structure.
- Single BV is directly owned by the shareholder (person). Profits are taxed with corporate income tax. Distributions of profits to the shareholder (person) will be taxed immediately.
- A BV holding structure consists of a holding BV (in case of several shareholders, several holding BV's) that hold the shares in the operating BV. Profits in the operating BV are taxed and can then be distributed to the holding BV tax-free. Capital built up in the holding BV is protected from bankrupcy in the operating BV. In case of a sale of shares in the operating BV (for example when the business is sold), the profits will be transferred to the holding BV where taxation can be postponed and profits reinvested free of tax.
Question:
Our start-up, which focuses on developing innovative solutions for early Alzheimer's detection, is considering adding a donation feature to our website to support our initiatives.
I have a few important questions and would be grateful for your insights on these matters:
- Donation Eligibility: Is our BV company eligible to receive donations, or is a change in company type necessary for this purpose?
- Adjusting Company Structure: If altering our company type is required to facilitate donations, could you please provide guidance on the necessary steps and procedures?
- Tax Implications: We are eager to understand the tax ramifications associated with accepting donations. Specifically, how are taxes applied to donations from individuals? Are these taxes deducted at the time of payment, or are they managed in our quarterly financial reports by our accountant? Furthermore, how are these taxes considered in post-audit assessments?
Answer:
The company (BV) can receive donations, but they will most likely be qualified as income/revenue. It's not necessary to change your company type solely for receiving donations, but the way these donations are treated will differ from a non-profit setup. If it makes sense to avoid that, you could set up a foundation instead. The tax implications for a BV receiving donations are quite different from those for non-profit organizations. As a BV, donations would likely be considered part of your taxable income. Taxes on these donations would be handled in the same way as other income – not specifically taxed at the time of each payment, but included in your overall financial accounts and taxed accordingly.
⚠️ Important note on ANBI status: A BV cannot obtain ANBI (Algemeen Nut Beogende Instelling) status in the Netherlands. This means donors cannot deduct their donations from their personal taxes when donating to your BV, which significantly reduces the incentive for people to donate. Only foundations (stichtingen) and associations (verenigingen) can obtain ANBI status. If tax-deductible donations are important for your fundraising strategy, you would need to establish a separate foundation with ANBI status alongside your BV. Many organizations use this hybrid structure: the BV handles commercial activities, while the foundation manages research and public benefit work.
ZZP or BV in the Netherlands: How to Choose in 2026
As explained above, one of the more common decisions for expat entrepreneurs when starting up is the decision between a sole proprietorship (known as “ZZP” for zelfstandige zonder personeel—formally eenmanszaak) or a BV. This choice has significant tax and liability implications.
Tax Differences: ZZP vs. BV
For a ZZP, business profit is taxed as personal income in “Box 1.” A ZZP can claim several tax deductions, such as the zelfstandigenaftrek (self-employed persons deduction) and MKB-winstvrijstelling (SME profit exemption). However, the Dutch government has significantly reduced these deductions in recent years to align the tax burden between employees and entrepreneurs.
In a BV structure, the company’s profit is first subject to corporate tax (VPB). As the director and major shareholder (DGA), you are legally required to pay yourself a "market-level" salary (gebruikelijk loon), which is taxed as personal income in Box 1. Any remaining profit can stay in the company or be distributed as a dividend, which is subject to a two-tier dividend tax in Box 2.
When a BV is a Better Option
While the ZZP remains attractive for lower profit levels due to tax credits, the tax comparison favors the BV as profits grow. Below is a simplified example comparing the net income from a business profit of €120,000 for both structures using 2026 tax rates.
Comparison: Profit of €120,000 (2026 Figures)
| Sole Proprietorship (ZZP) | BV Structure |
|---|---|
| Taxable Income Calculation | Company Profit Calculation |
| Profit from business: €120,000 | Profit from business: €120,000 |
| Self-employed persons deduction (2026): – €1,200 | Salary of managing director: – €63,000 |
| SME profit exemption (12.7%): – €15,088 | Additional costs (e.g., admin): – €3,000 |
| Taxable income: €103,712 | Profit BV for corporate tax: €54,000 |
| - | Corporate tax (19%): – €10,260 |
| - | Tax Box 2 (Dividend 24.5%): – €10,716 |
| - | Remaining profit (net dividend): €33,024 |
| Net Income Calculation | Net Income Calculation |
| Profit from business: €120,000 | Salary of managing director (gross): €63,000 |
| Tax Box 1 (inc. Zvw): – €44,500 | Tax Box 1 on salary: – €21,500 |
| Tax credits (est.): + €800 | Tax credits (est.): + €4,200 |
| - | Dividend distribution net: + €33,024 |
| Net income: ~ €76,300 | Net income: ~ €78,724 |
As the table shows, the BV structure can result in a higher net income at this profit level. The benefit of a BV increases with profitability because the ZZP deductions are fixed or capped, whereas the BV allows you to keep funds within the company at the lower corporate tax rate. A key strategic advantage of the BV is the flexibility to choose when to distribute profits, allowing you to defer personal tax.
Liability: The BV Advantage
A major benefit of the BV is limited liability. The company is a separate legal entity. This means that as a director and shareholder, your personal assets (like your home or savings) are generally protected from business debts. You are not personally liable unless there is evidence of mismanagement, fraud, or if you sign private guarantees. In a ZZP, there is no distinction between business and personal assets; creditors can claim your personal belongings to pay business debts. This makes the BV a critical factor for risk management.
Other Considerations
- Cost: A BV has higher setup and maintenance costs due to legal and administrative requirements (notary fees for incorporation, mandatory annual financial statements). A ZZP is simpler and free to register at the Chamber of Commerce (KvK).
- 30%-Ruling: Foreign entrepreneurs who are employees of their own BV may qualify for the 30% ruling (which, as of 2027, follows a scaling percentage or a 27% cap depending on your start date). A ZZP does not qualify for this tax advantage. If you are eligible, the BV is almost always the more financially sound choice.
- Administration: A BV requires more robust administration, including corporate tax filings (VPB), annual reports to the Chamber of Commerce, and a monthly payroll for the director’s salary.
- Legal Formalities: The BV formation process requires a deed of incorporation from a Dutch notary, whereas a ZZP can be set up in a single appointment at the KvK.
To determine which structure is best for your specific situation, a detailed calculation of the tax implications is necessary. The Dutch Tax Authorities (Belastingdienst) provide updated information on both structures for 2026.
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Compare legal forms in the Netherlands In the Netherlands, choosing the right legal form for your business is a crucial decision with far-reaching implications. This comprehensive guide examines various Dutch legal forms, including the Besloten Vennootschap (BV), sole proprietorship (also known eenmanszaak as ZZP), partnership, co-operative, and foundation. Our in-depth comparison table highlights the key […]
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Compare legal forms in the Netherlands
In the Netherlands, choosing the right legal form for your business is a crucial decision with far-reaching implications. This comprehensive guide examines various Dutch legal forms, including the Besloten Vennootschap (BV), sole proprietorship (also known eenmanszaak as ZZP), partnership, co-operative, and foundation.
Our in-depth comparison table highlights the key characteristics of each entity type, allowing you to make an informed decision based on factors such as setup procedure, requirements, liability, taxation, and governance. Whether you're launching a start-up or restructuring an existing company, this article will provide valuable insights to help you navigate the Dutch business landscape.
Compare the various business structures in the Netherlands below or request a free quote for setting up a legal entity in the Netherlands.
| BV / LLC | Branch | Co-operative | Foundation | Sole proprietorship | Partnership | ||
|---|---|---|---|---|---|---|---|
| Description | An autonomous legal entity governed by a board of directors responsible for making significant business decisions, managing daily operations, and overseeing the company's affairs. Shareholders appoint the directors, and the company can establish a supervisory board to monitor the directors' policies and overall business direction. Alternatively, a unified board comprising executive and non-executive directors can be formed. | A branch office is not considered an independent legal entity. It functions as a local office of a non-Dutch legal entity in the Netherlands, representing the head office. | A member-owned and democratically-controlled organization, typically established to meet the common economic, social, and cultural needs of its members. | A legal entity for non-profit purposes, such as charitable, cultural, educational, or scientific activities. | For freelancers or very small businesses with one owner. | An easy to set up partnership between 2 or more individuals. | |
| Suitable for type of business | Small and large businesses of any type. Investor-friendly and flexible. | Existing foreign companies with limited presence in the Netherlands | Businesses seeking a collaborative model with shared benefits and responsibilities among members. | The Dutch foundation can be used for various purposes, such as charitable, cultural, educational, or scientific activities. It is commonly used for non-profit organizations | Freelancers, very small businesses with one owner. | Very small businesses with more than one owner. Also frequently used for professionals, such as accountants, lawyers and healthcare professionals. | |
| Minimum capital requirement | No capital requirement (minimum share capital is one share of 0,01 euro) | Subject to the regulations of the head office's jurisdiction. | No minimum capital requirement | No minimum capital requirement | No minimum capital requirement | No minimum capital requirement, but partners should contribute capital or assets | |
| Setup steps | Select a unique company name, engage a notary for Articles of Association, appoint directors/shareholders, register with the Dutch Chamber of Commerce, acquire permits/licenses, open a corporate bank account, register for taxes | Determine if you have a permanent or non-permanent establishment. For a permanent establishment, register with the Dutch Business Register (Handelsregister) using forms 6, 11, and 13. Submit required documents (proof of company registration, Memorandum of Association, Articles of Association, and Certificate of Incumbency). Pay the one-time registration fee. For a non-permanent establishment, register for VAT with the Dutch Tax and Customs Administration if required. | Decide on cooperative structure, draft Articles of Association, register with the Dutch Chamber of Commerce, open a bank account, register for taxes, obtain required permits/licenses | Choose a business name, set up at the notary, register with the Dutch Chamber of Commerce, obtain necessary permits/licenses, open a business bank account, optionally: register for taxes | Choose a unique business name. Register with the Dutch Chamber of Commerce (KVK). Obtain any necessary permits or licenses. Open a business bank account. Register for taxes with the Dutch Tax and Customs Administration. Consider acquiring relevant insurance coverage. | Select a unique business name. Draft a partnership agreement outlining roles, responsibilities, and profit distribution. Register the VOF with the Dutch Chamber of Commerce (KVK). Obtain any necessary permits or licenses. Open a business bank account. Register for taxes with the Dutch Tax and Customs Administration. Consider acquiring relevant insurance coverage. | |
| Local office lease requirement | No strict requirement, but a physical office space is generally preferred over a virtual office. Read more. | Depends on the nature of the branch and its activities | Not strictly required, but physical presence can be advantageous | Usually requires a physical presence in the Netherlands for operational and legal purposes | Not strictly required, but can depend on the nature of the business | Not strictly required, but can depend on the nature of the business | |
| Is a virtual office sufficient? | No | No | No | No | No | No | |
| Nationality or residency requirements | It is not a legal requirement. However, tax substance rules mandate that Dutch tax resident directors make up at least 50% of the board. Banks and notaries often require a resident director to meet KYC requirements. | Subject to the regulations of the head office's jurisdiction. | No specific nationality requirements, but members must adhere to cooperative principles | No specific nationality requirements | In order to set up a sole proprietorship (eenmanszaak/zzp) you will need to be a resident in the Netherlands and hold a valid social security (BSN) number. | All partners should be residents in the Netherlands | |
| Capital requirement | Issued capital is minimal EUR 0.01 (1 share of 1 cent). No minimum capital requirement. | No, not for the branch itself. Subject to the regulations of the jurisdiction where the head office is located. | No minimum capital requirement | No minimum capital requirement | No minimum capital requirement. | No minimum capital requirement, provided that each partner contributes some form of capital or assets to the partnership, as agreed upon by the partners. | |
| Personal liability | No | No | Varies, can be limited or unlimited depending on the cooperative's structure | No | Yes | Yes | |
| Audit required | The balance sheet value is more than €6 million. The net turnover for the financial year exceeds €12 million. The average number of full-time employees over the financial year is more than fifty. If your company meets two of these three criteria, an audit by a certified accountant is mandatory, and you will need an auditor's statement. | Subject to the regulations of the head office's jurisdiction | Varies based on size and type of cooperative | Depends on the size and activities of the foundation | Generally not required for small businesses | Generally not required for small businesses | |
| Shelf company possible / allowed? | Not used in practice. | - | - | - | - | - | |
| Accounting tasks and tax returns | Corporate income tax return (CIT): BV companies must file a CIT return annually to report their taxable income and calculate the amount of tax owed. Value-added tax (VAT) return: BV companies must file a VAT return periodically to report the amount of VAT collected and paid on sales and purchases. Payroll tax returns: BV companies must file periodic payroll tax returns to report and pay the tax withheld on employee wages and salaries. Annual accounts: BV companies must prepare annual accounts that include a balance sheet, profit and loss statement, and notes to the financial statements. Corporate income tax provision: BV companies must prepare a corporate income tax provision as part of the annual accounts. Shareholders' meeting: BV companies must hold an annual shareholders' meeting to approve the annual accounts and discuss other important matters. Employer returns: BV companies must file periodic employer returns, including wage tax returns and social security returns, to report and pay employer contributions. | Depends on the regulations of the head office's jurisdiction | Similar to BV, but may have additional reporting based on cooperative activities | File necessary tax returns and maintain financial records according to Dutch law | File income tax return, VAT return if applicable, maintain financial records | File income tax return, VAT return if applicable, maintain financial records | |
| Local director or corporate secretary services supplied by law firms or independent providers | Only licensed trust service providers are allowed to offer this. Law firms are not. | Not applicable | Only licensed trust service providers are allowed to offer this. Law firms are not. | Only licensed trust service providers are allowed to offer this. Law firms are not. | - | - | |
| Carrying losses forward (and back) | Starting from 1 January 2022, losses can be carried forward indefinitely. However, if a company's taxable profit is more than EUR 1 million, only 50% of the profit over EUR 1 million can be offset by these losses. This rule applies to losses incurred in financial years beginning on or after 1 January 2013. | Depends on the regulations of the head office's jurisdiction | Allowed, specific rules apply | Allowed, specific rules apply | Allowed, specific rules apply | Allowed, specific rules apply | |
| Local bank account required? | It's not a requirement for incorporation. You can open a bank account anywhere, but to comply with tax substance rules, the main account must be overseen and controlled from the Netherlands. | No | No | No | No | No | |
| Nominee director allowed? | No | No | Varies based on the cooperative's structure | No | - | - | |
| Business licenses required? | No. Exceptions apply for certain industries such as pharma and finance. | No. Exceptions apply for certain industries such as pharma and finance. | No. Exceptions apply for certain industries such as pharma and finance. | No. Exceptions apply for certain industries such as pharma and finance. | No. Exceptions apply for certain industries such as pharma and finance. | No. Exceptions apply for certain industries such as pharma and finance. | |
| Are identity of shareholders and directors publicly available? | The identities of directors and Ultimate Beneficial Owners (UBOs) – individuals who ultimately own or control more than 25% of the company's shares, voting rights, or ownership interests – are publicly disclosed through registration with the Dutch Chamber of Commerce (KVK). | For a Dutch branch office of a foreign company, the identity of the directors and the appointed local representative must be registered with the Dutch Chamber of Commerce (KVK). This information becomes publicly available. However, the identities of the shareholders are generally not required to be disclosed in the case of a branch office. | Depends on cooperative structure and regulations | Usually, board members are registered with the Dutch Chamber of Commerce | No | No | |
| Closing down company process | Follow legal dissolution procedures, settle debts, deregister from Chamber of Commerce | Follow the head office's jurisdiction rules and deregister from Dutch authorities | Follow specific cooperative dissolution procedures, settle debts, deregister from Chamber of Commerce | Follow legal dissolution procedures, settle debts, deregister from Chamber of Commerce | Settle any outstanding debts. Deregister from Chamber of Commerce | Settle any outstanding debts. Deregister from Chamber of Commerce | |
| Name requirements | Uniqueness, clarity, include "BV", avoid restricted terms, no trademark infringement | Uniqueness, clarity, avoid restricted terms, no trademark infringement | Uniqueness, clarity, no trademark infringement | Uniqueness, clarity, no trademark infringement | Uniqueness, clarity, no trademark infringement | Uniqueness, clarity, no trademark infringement | |
| Corporate compliance obligations | Annual director and shareholder meeting, maintain proper records | Compliance with Dutch and head office's jurisdiction regulations | Annual member meetings, maintain proper records | Annual board meetings, maintain proper records | Maintain proper records | Maintain proper records, partnership agreement adherence | |
| Limitations on share transferability | Share transfer restrictions can be set in Articles of Association and/or the shareholders' agreement | - | Depends on cooperative rules | - | - | Transfer restrictions can be set in the partnership agreement | |
| Common structures per entity | Holding BV structure, Finance BV, Intellectual Property (IP) BV, Real Estate BV | - | Consumer cooperative, Producer cooperative, Worker cooperative, Multi-stakeholder cooperative | - | - | General Partnership (VOF), Limited Partnership (CV) | |
| Tax advantages | Corporate tax benefits, participation exemption, innovation box regime | Depends on the tax treaties and laws of the head office's jurisdiction | Cooperative tax regime, potential VAT benefits | Tax exemptions for non-profit activities | Several tax deductions for small entrepreneurs (zelfstandigenaftrek, startersaftrek, MKB-winstvrijstelling), VAT exemption for small businesses | ||
| Required and recommended legal documents | Articles of Association, Registration Documents, Shareholders' Agreement, Director Appointment Letters, Annual Financial Statements | Branch Registration Documents, Parent Company's Documents (e.g., Memorandum of Association, Articles of Association), Power of Attorney for Local Representatives | Articles of Association, Membership Agreements, Registration Documents, Annual Financial Statements, Meeting Minutes | Articles of Foundation, Registration Documents, Board Member Appointment Documents, Annual Financial Statements | Registration Documents, Business License (if applicable), Tax Registration, Insurance Policies | Partnership Agreement, Registration Documents, Business License (if applicable), Tax Registration, Insurance Policies |