Setting up a B.V.

A private limited company (B.V.) is a legal entity with a capital divided into shares. The shareholders contribute money to the company and receive shares in return. These shares give both an economic interest in the business and control over important decisions within the B.V.

The B.V. is a commonly used legal form for entrepreneurs who want to separate their private assets from their business activities and risks.

Incorporating a B.V.

A B.V. can only be incorporated by means of a notarial deed. This deed of incorporation records, among other things, the articles of association of the company. The starting capital can be set from as little as one euro cent, although in practice a higher capital is often contributed to better reflect the value of the shares.

After incorporation, the B.V. must be registered in the trade register of the Chamber of Commerce and in the UBO register, in which the ultimate beneficial owners are registered.

Bodies within the B.V.

Every B.V. has at least two bodies: the general meeting of shareholders and the management board.

The management board, consisting of one or more directors, is responsible for the day-to-day management of the business.

The shareholders exercise their control in the general meeting of shareholders. This is the highest decision-making body within the B.V. and has, among other things, the power to:

• appoint and dismiss directors;  

• amend the articles of association;  

• resolve to dissolve the company.  

In addition, a B.V. may have a supervisory board. It supervises the management board and provides advice where necessary. 

Liability

An important advantage of the B.V. is the limited liability of shareholders. In principle they are not personally liable for the debts of the company, but only up to the amount they have contributed.

Directors and supervisory board members are in principle also not personally liable, unless there is mismanagement or insufficient supervision. In that case they can be held personally liable for the resulting damage.

Tax and income

The profit of the B.V. is subject to corporate income tax. Shareholders may also pay personal tax on their income from the B.V.

An interest of 5% or more constitutes a substantial interest. Dividends are then taxed in box 2. In the case of a smaller interest, the value of the shares generally falls under box 3.

Directors who are also shareholders with a substantial interest must in addition receive a customary salary, which is taxed in box 1. Although dividends are often more attractive from a tax perspective, clear statutory rules apply to this.

Incorporating a B.V. therefore also has tax consequences. It is advisable to first consult a tax adviser.

In summary

The B.V. offers entrepreneurs flexibility, protection of private assets and clear tax and legal frameworks. A well-designed structure and notarial guidance are essential to make optimal use of this legal form.