Limit your partner's liability for your business
- Jelle van der Walle
- How to
- Edited 10 March 2025
- 5 min
- Starting
You start a business, and you have a partner. What about liability? Does your partner have to help pay if your business goes bankrupt? It depends on your official relationship status and the legal structure of your business. If you do not arrange things properly, the consequences for you and your partner could be serious if your business is held liable. Read about the business and private matters you need to arrange to limit the risks.
The rules for a marriage and a registered partnership are the same. Everything in this article about marriage and prenuptial agreements also applies to a registered partnership and partnership agreements.
Business matters
The legal structure of your business plays an important role in your and your partner’s liability. There are legal structures with and without legal personality.
Legal structures with legal personality
With legal structures with legal personality, you and your partner are not personally liable for the debts of your business. Legal structures with legal personality are:
- Â besloten vennootschap (private limited company, BV)
- naamloos vennootschap (public limited company, NV)
- coöperatie (cooperative)
- stichting (foundation)
- vereniging (association)
There are exceptions where you can be held personally liable. For example, if you mismanage your BV.
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#5 Choose a legal structure
Borrowing money
If you borrow money to start your business, the bank often asks you and your partner to sign privately for the loan. If you signed privately and your business does not pay back the loan, then the bank can hold you privately liable for this.
Legal structures without legal personality
With legal structures without legal personality, you have full private liability. With these legal structures, you must pay off debts with your own capital. This includes assets you have together with your partner. Legal structures without legal personality are:
- eenmanszaaak (sole proprietorship)
- vennootschap onder firma (general partnership, VOF)
- maatschap (professional partnership)
- commanditaire vennootschap (limited partnership, CV)
Special general partnership (VOF): de man-vrouwfirma
If you and your spouse run a VOF together, you are in a so-called man-vrouwfirma (husband-and-wife business). You are then both personally liable for business debts with your private assets. Taking out a prenuptial agreement does not offer protection against this. The man-vrouwfirma is a variety of the VOF (general partnership), not a separate legal structure. It applies to all couples (married or registered partners), their sex makes no difference. The structure is widely used in agricultural businesses and the catering industry.  Â
Private matters
Besides the legal structure, the form of your relationship or cohabitation determines your partner's liability. The different possible forms of relationship and cohabitation:
- Not cohabiting
- Living together without a cohabitation contract
- Living together with a cohabitation contract
- Married or registered partnership
- Divorced
Not cohabiting
If you and your partner do not live together, your partner is separate from any agreements you enter into as an entrepreneur and your partner is not liable.
Living together without a cohabitation contract
Even if you are cohabiting, your partner is separate from any agreements you enter into as an entrepreneur. Your partner is therefore not liable. However, when you live together, you often have joint assets. Creditors of the company can have these seized if your company cannot pay its debts.
Living together with a cohabitation contract
In a cohabitation contract, you and your partner make agreements about your relationship. For example:
- The division of household costs.
- The division of joint possessions if you separate.
- Agreements that prevent a claim being made on joint assets if the business goes bankrupt. This is known as a (residence clause, in Dutch).
The content of a cohabitation contract is not subject to legal rules. When starting your business, ask yourself what happens to debts or assets if you separate and have a civil-law notary draw up a cohabitation contract. The cohabitation contract can also be important for the future. Such as the right to each other's pensions or agreements on what happens to assets in case of death.
Married or registered partnership
In the case of marriage or registered partnership, your partner's liability is determined by:
- Whether you got married or became registered partners before or after 1 January 2018.
- Whether you have drawn up prenuptial or partnership agreements.
Married before 1 January 2018
Since 1 January 2018, the Limited Community of Property Act has been in force. Did you enter into a marriage or registered partnership before this date without a prenuptial agreement? Then you are married with community of property. You share all the assets and debts you acquire during the marriage, but also all the assets and debts you had before you got married. Also the business. So, your partner shares in the entrepreneurial risk. If you get divorced, you have to share this joint property. To avoid this, it is wise to get advice from a civil-law notary.
Has a prenuptial or partnership agreement been drawn up? A past agreement may have different consequences because of the start of your own business. So take a careful look at this.
Tip
Review your prenuptial or partnership agreement every 5 years. Growing or winding down your business changes your entrepreneurial risk. After some time, you may decide you want to change the asset separation in the prenuptial agreement.
Married after 1 January 2018
What you had privately before the date of your marriage or registered partnership remains private. The assets that you and your partner build up from the date of marriage or registration are shared, unless you have drawn up a prenuptial or civil partnership agreement stating otherwise.
Marriage or registered partnership in the future
If you started the business before you entered into a marriage or registered partnership, your business remains outside the common property of you and your partner. However, it is advisable to draw up a prenuptial or partnership agreement. This is because of article 1:95a of the Dutch Civil Code. This states that a ‘reasonable contribution’ from a business that existed before the marriage or registered partnership, must be paid to the community of property. This is to prevent the partner who owns the business from leaving all profits in the business and not sharing it with their partner, even though the partner may be employed, and their income does fall under the community of property and must be shared.
Reasonable contribution
What a reasonable contribution is depends on the situation. You determine this together with your partner based on the size of the business, the profit, and the industry. Get advice from a bookkeeper or accountant. And have a civil-law notary record the way you calculate the contribution in a prenuptial or partnership agreement. If you have not agreed on the calculation of the reasonable contribution in advance, a judge will decide the amount to be included in the community of property upon divorce.
Divorced
It is good to know how divorce will affect your business. Does the company, or the value of the shares of a limited company, fall into the joint ownership? If so, you must buy out your ex-partner’s share. So, you must be able to find the money to do this. At the time of your separation, the judge will also look at whether you have followed the agreed prenuptial or partnership conditions. These conditions often include a ‘settlement clause’. This is an agreement that periodically – for example annually – extra income of partners will be shared. In practice, many people do not comply with this settlement clause, but that becomes a problem if you get divorced. Because if agreements from the prenuptial or partnership agreement were not followed, they are no longer valid. The court then determines that there is community of property after all. In that case, you do have to share the value of your business.
Tax benefit
As partners, do you each work 1,225 hours a year in the business? Then you are each entitled to tax deductions on your own share of the profit. For instance, the private business ownership allowance 9zelfstandigenaftrek), the tax relief for new companies (startersaftrek), or SME profit exemption (mkb-winstvrijstelling). If you each apply those deductions, you will have to pay less tax together and the net income in the joint household is higher.
Does your partner work in your business? Even with legal structures other than a general partnership, tax benefits are still possible, such as the co-working partner tax relief (meewerkaftrek).
Get help
As you can see, there is a lot involved in getting everything right. Consider hiring a legal adviser or civil-law notary. Arrange it now so you are prepared for the future.