Must Know Information About Netherlands BV Companies

Posted by JanyLufi on October 26th, 2017

Besloten vennootschap (BV) is the Dutch version of a limited liability company whose shares are registered privately but can be transferable freely. It is the most common form of business unit in the country as it offers a convenient platform for individuals and legal entities to run their operations. By getting complete information on Netherlands BV company, and hiring a law firm specializing in its formation, any foreign individual or entity can initiate their lawful business operations in the country with ease.

One or more individuals or legal entities, including foreign ones, can form a BV with a minimum paid up capital of €0,01. The requirement of near non-existent minimum paid up capital means that expense for starting a BV in Netherlands is, effectively, only on legal formalities.

Advantage Netherlands

The Netherlands is popular as a destination for foreign business due to the substantial tax benefits it offers. The country has entered into extensive Double Tax avoidance treaties with many countries and passed legislation to ensure tax benefits to holding companies. As the Dutch BV offers all the tax benefits that apply to a local company, its formation is a viable option for new foreign players to enter the country. The BV is deemed to be a fully tax resident entity in Netherlands. Therefore, all the tax treaties and benefits that apply to any tax resident individual or company in the country applies to a new BV too.

Participation Exemption – Major Advantage of a Dutch BV

Individuals and companies can use a BV in Netherlands to buy shares of reputable businesses and for international share holdings as well. One of the major advantages of this is when such a BV gets approved for what is known as Participation Exemption, which means exemption from tax liability on dividends earned by a BV. The first essential condition to get approval for the said exemption is holding of at least 5 percent interest in the subsidiary (the BV company formed in Netherlands).

The other conditions include:

  1. The investment should qualify as operational (it should not be a portfolio investment)

  2. Reasonable tax rates apply on the Dutch subsidiary according to “tax rest” principles

  3. Less than 50 percent of the assets that the subsidiary holds qualify as “passive” based on fair market value

The local director of a Netherland BV company is held responsible for maintaining the company’s financial solvency as well as the legality of its operations. Given the major benefits that this company offers in the country, many foreign players hire the services of accomplished corporate legal firms in the country to initiate their business expansion plans.

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