Private limited company (BV)

What is a BV?

A BV (besloten vennootschap) is a legal form with legal personality. This means that the BV has rights and obligations, just like a human being. A BV must pay taxes and abide by the law. If debts arise, the BV must pay them. Your private assets are usually safe from creditors.

How is a BV structured?

The structure of a private limited company is a bit more complicated than, for example, a sole proprietorship:

Shareholders

A BV is divided into shares. The shareholders are the owners of the BV. They own (part of) the shares, pieces of the company. If you start a BV on your own, you are the only shareholder.

You can only buy and sell the shares of a BV with the consent of the other shareholders. That is why it is called a private limited company. In a public limited company, (naamloze venootschap, NV), anyone can buy shares.

Managing director(s)

Directors run the company. They can also be shareholders. A private limited company can have one or more directors.

Director-major shareholder (dga)

Are you a director of a BV and do you have at least 5% of the shares? Then you are a director-major shareholder (directeur en grootaandeelhouder, dga). You are employed by the BV and therefore also receive a salary from the BV.

Setting up a private limited company

To set up a private limited company you need to go to a civil-law notary. The notary will create a notarial deed and go over the articles of association with you. These are the internal rules the BV must follow. They include:

• the company's purpose
• the company’s activities
• the responsibilities of the board of directors
• the number and types of company shares.

Ultimate beneficial owners

When setting up a private limited company, you have to register the ultimate beneficial owners (UBOs) of the BV in the UBO register. For example, people who own more than 25% of the shares. A BV can have 1 or more UBOs. Learn more about the UBO register.

Costs

There are costs when you set up a Dutch BV with a civil-law notary:

• Notary fees: €500 to €1,500 
• KVK registration fee: the civil-law notary registers the company in the KVK Business Register. You pay a one-time registration fee for this.
• Business bank account: you need a business account with a minimum of €0.01

BV under incorporation

You may already want to make arrangements on behalf of your private limited company before the notary has drawn up a deed of incorporation. For example, if you want to rent or buy business premises. You can then already register your company with KVK as a BV under incorporation (BV in oprichting, BVi.o.).

You are personally liable for any agreements you make on behalf of the BV i.o.). And you must make it clear to business partners that your limited company is still in formation.

Second BV: the holding company

Entrepreneurs often set up 2 private limited companies. You then call the first BV an operating company. From this company you do the work and send invoices. The second BV is a  holding company. This company holds the money and other assets of the company, such as profits, a pension, and business premises.

A holding company allows you to spread risks, be more flexible, or get tax benefits. Setting up a holding company has advantages and disadvantages.

Liability and debts

Sometimes things do not go as well as expected. The question is then who is liable. In a legal form with legal personality, the legal person is liable. Is the company in debt and can no longer pay it off? Then the BV goes bankrupt.

You can lose the money you invested in the BV. But creditors are not entitled to your private assets, such as your savings, car, or house.

Personally liable

Your private assets are usually safe if something goes wrong with your private limited company. But there are exceptions: if you deliberately mismanaged your BV, for example. Did you fail to report payment problems to the tax authorities on time? Or did you enter into contracts when you knew you couldn't stick to them? Then that is considered bad leadership. Also known as mismanagement.

Also, if you take out a loan for the BV, you are often personally liable. If the BV cannot pay off the loan, then the bank is entitled to your private money.

Taxes

Once the notary registers your BV with KVK, the Tax Administration will automatically contact you. If your business is subject to VAT requirements, you will receive a VAT identification number (VAT ID) and a  VAT number for turnover tax. You should file your VAT return online every quarter, or even monthly if you prefer.

As a director of a BV, you must earn at least the customary wage as set out by the Tax Administration. This is set at €56,000 per year in 2024. This wage is subject to payroll tax.

Profit

The BV is responsible for filing a tax return on the profit earned. Profit is calculated as the turnover minus purchases and costs, which include salaries for the director and other employees. The tax on profits is known as corporate income tax (vennootschapsbelasting, VPB). There are two rates of VPB:

• Profit up to € 200,000: 19%
• Profit above € 200,000: 25.8%

After paying the corporation tax, the BV can allocate the remaining profit to reserves or equity.

Dividends

The meeting of shareholders can also decide to make a profit distribution. All shareholders will then receive dividends. The BV deducts 15% dividend tax.

Do you have a substantial interest (aanmerkelijk belang)? Then you pay 24.5% tax on the first €67,000 euros. On everything above that, the dividend tax is 33%. You can deduct the dividend tax withheld by the BV on your tax return.

Administration

Every entrepreneur must keep records. Bookkeeping is a critical part of this. With this information, you can prepare annual accounts. Drawing up such annual accounts is mandatory for a private limited company. It is an overview of the costs and income of the BV. You use the annual accounts for your tax returns.

After closing the financial year, the BV must file a balance sheet with explanatory notes with KVK. These documents are public.

Requirements for administration

The Tax Administration has requirements for your records. In addition to your annual accounts, your records must include your agenda or invoices. And you must keep the records. You can do the administration yourself or hire a bookkeeper or accountant.

Staff

A private limited company can employ personnel. The BV is the employer and pays payroll taxes and social security contributions. Are you hiring an employee for the first time? Then you must register as an employer with the Tax Administration and report to KVK how many people work for your BV.

Are you a director and do you have more than 50% of the shares? Then you are not entitled to employee insurance (WW, WIA, ZW).

Modifying or terminating a BV

There are several ways to end your limited company:

1. Stop.
   This is called termination. You must follow a liquidation procedure.
2. Convert a limited company into a sole proprietorship or partnership.
   You can change the legal form of your company. If you want to convert the BV into the legal form of sole proprietorship or VOF, you have to dissolve the legal entity.
3. Selling the company.
   Are you selling your BV? Then you have to transfer the shares to the new owner at a notary. If you make a book profit on the sale of the shares, you will face income tax from substantial interest (box 2).
4. Selling assets and liabilities.
   You can also sell only the assets and liabilities. You then remain owner of the BV yourself. The BV pays corporation tax on any profit on the assets.

If you stop your BV, this may have consequences for, for example, permits from the municipality, financing, insurance, pension fund, or the BV's bank account. Find out from these organisations what you need to do if you stop your business.

Is a private limited company suitable for you?

Setting up a BV is more expensive than, say, a sole proprietorship. You need a notary to get started. And the annual costs and taxes for a private limited company are higher. That is why most entrepreneurs start a private limited company only when they make a lot of profit. With this calculator tool, you can calculate whether a BV is convenient for you.

Choosing a BV structure just to avoid private liability is not always the best option. With other legal forms, you can reduce the risks with business liability insurance, for example. You can set up clear delivery and payment terms.