Category

Legal

What are the Dutch director requirements and liabilities of company with a business in the Netherlands?

By Legal

 

Requirements of a Director

The board of directors a Dutch limited liability company ( private company , ‘BV’ or  public limited company , ‘NV’) may consist of only one managing director. The board of directors is the executive body of the company and responsible for the management and administration, its day-to-day affairs, and the operations of its business.

The members of the board of directors are appointed and removed by the shareholders. The managing director of a Dutch limited liability company doesn’t need to be a Dutch resident or national, even a corporate entity may act as managing director. There may be tax reasons to have a majority of Dutch resident directors.

Generally stated by the articles of association, each director of a Dutch limited liability company is solely authorized to represent the company. However, it is possible to that the articles of association of the Dutch limited liability company determine that the directors are only jointly authorized. This provision has external powers, meaning that it can be invoked against third parties. It is also possible that the articles of association provide that certain acts of the board of directors require the prior approval of another corporate body such as the shareholders’ meeting or the supervisory board. Such a provision is only internally valid and cannot be invoked against a third party, except where the party in question is aware of the provision and did not act in good faith.

Supervisory directors or two-tier board

Under certain circumstances a Dutch limited liability company can have a supervisory board. The duty of the supervisory board of directors is solely to supervise the board of directors.

Each Dutch limited liability company must prepare an annual account, in a defined format, which must be signed by the members of the board of directors of the Dutch limited liability company. The annual accounts should give a true and fair view of the state of affairs of the company and of its profit or loss for that period. The members of the board of directors are responsible for keeping records that are sufficient to show and explain the company’s transactions and will, at any time, enable the financial position of the company to be determined with reasonable accuracy. They are also responsible for safeguarding the assets of the company and hence for taking responsible steps for the prevention and detection of fraud and other irregularities.

Liability of a Director

In principle, the liability of the Dutch limited liability company is limited to its share capital and reserves. The managing and supervisory directors may be held personally liable for liabilities of the Dutch limited liability company (internally) towards the company itself or (externally) towards third parties under certain circumstances. Mismanagement must be involved for this to apply.

The managing and supervisory directors can be, under conditions (in case of (deemed) mismanagement), liable for the following events:

  • Incorrect annual accounts;
  • Involuntary liquidation of the company;
  • Losses;
  • Non-compliance with internal limitations;
  • Failure to pay taxes;
  • Negligence or improper management in the preceding 3 years.

Investment protection: how to setup an investment assets protection structure in the Netherlands.

By Legal, News

On Tuesday, February 2, the second webinar of KC Legal took place, where the speakers from NL-investmentconsulting and KC Legal – Nikos Lavranos and Friggo Kraaijeveld took part.

During the webinar speakers discussed BITs, its benefits, operation, Yukos case, Vodafone case, tax treaties, international arbitration and its usage against unfair government measures. Nikos Lavranos highlighted the ways to achieve optimal asset protection through BITs and demonstrated how it can benefit business. Throughout the webinar Mr. Lavranos illustrated substantive investment protection standards. The expert also discussed how to access the international arbitration and provided the cases where international arbitration was used against unfair government measures. In addition, the expert gave advice on setting up a company structure for optimal asset protection.

The second speaker, Friggo Kraaijeveld, spoke about international tax treaty dispute resolution and explained its general principles and aims. “What we want to achieve with tax treaty protection is to avoid double taxation” – pointed out the partner of KC Legal. “Setting up an investment protection treaty is some kind of insurance to avoid additional costs” – added Friggo.

KC Legal and NL-investmentprotection are the leading firms in their field. You can always reach us by LinkedIn or by e-mail. We will be glad to assist and help your business to grow.

Find out more:
Instagram: @kclegalnl
#doingbusinessinthenetherlands #financenetherlands #kclegal # nlinvestmentconsulting # investmentprotection

New documentation requirements under ATAD2

By Legal

ATAD2 (Anti Tax Avoidance Directive 2) has been implemented in Dutch tax law as per 1 January 2020 and neutralizes hybrid mismatches that bring about double deduction of deduction without inclusion between affiliated entities.

 

ATAD2 also introduces important additional documentation requirements for the 2020 corporate income tax return and following years. The documentation requirements enable the Dutch tax authorities to review if and how the taxpayer has calculated a correction in its tax return based on these ATAD2 regulations. Dutch tax law does not explicitly mention the (minimum) documentation requirements but the Dutch government has indicated that the following information will be relevant.

  • Worldwide organizational chart of the group;
  • An assessment of the qualification of financial instruments, hybrid entities or permanent establishments, including foreign tax returns and tax assessments;
  • An opinion of an expert in the area of ​​foreign tax law. 

Please note that the documentation requirement also apply if no correction to the taxable profit is considered necessary based on ATAD2.


KC Legal can assist you in the determination and preparation of the required documentation under ATAD2.

 

Find out more:
Instagram: @kclegalnl

What are the Dutch shareholder requirements and liabilities of a company that is set up in the Netherlands?

By Legal

In principle, there are no specific shareholder requirements for a Dutch limited liability company ( private limited company , ‘BV’ or public limited company, (‘NV’)). It is sufficient to have one shareholder with voting rights and the maximum of shareholders is unlimited.

There is no restriction on the residence of the shareholders of a Dutch limited liability company. The shareholders can be private individuals or legal persons. If there is only one shareholder, the name of such shareholder must be registered in the Dutch Trade Register ( Handelsregister ) at the Chamber of Commerce ( Kamer van Koophandel ). If the company has two or more shareholders, then their details are not available on public record. The shares in the capital of a Dutch private limited liability company ( private company , BV) May only be issued in registered form, Whereas the shares in the capital of a Dutch public limited liability company ( joint stock company, NV) may be in registered or bearer form. In the case of registered shares, shareholders will be registered in the shareholders register kept at the registered office of the company, which lists the names and addresses of all shareholders, number of shares, the amount paid-up on each share and the particulars of any transfer, pledge or usufruct of the shares.

Shareholders of a Dutch limited liability company are, in principle, only (financially) liable for their investment in the company, and not personally liable for any debts of the Dutch limited liability company. If the shareholders act as the factual director (actual policymaker), the shareholder could be held liable to the same extent as the formal directors. It differs in each case whether a shareholder actually acts as a director / policy maker. The shareholder may also voluntarily assume the liability for the debts of the subsidiary under application of specific financial consolidation rules.

What are the Netherlands license and permit requirements for operating Dutch companies with a business in the Netherlands?

By Legal

Most business activities can be performed without any permits, licenses or professional qualifications. An environmental permit may be required if your products or business operations negatively affect the environment. Permits and licenses can be applied for at the municipality or at the provincial authorities.

Some sectors require registration with an industry board or a product board. Registration is a statutory requirement, based on the Act on Business Organizations. An industry board is a kind of interest group for a specific sector. The same applies to a product board, which includes all enterprises in a production chain, from producers of raw material to manufacturers of end products. You do not require a separate diploma or permit in order to establish a business in the Netherlands. Nevertheless you are only allowed to practice certain professions if you meet specific requirements.

There are regulated professions and professions that are subject to certain professional competence requirements. A regulated profession is one where access to or practice of a profession is restricted to those who meet the professional qualifications required by law. In the European Union’s Regulated Professions Database you can find the list of the regulated professions in the Netherlands, with a reference to the related organization.

How to hire Dutch or foreign employees by Dutch companies with a business in the Netherlands?

By Legal

If you run a business in the Netherlands and intend to employ staff, you will have to deal with various government rules and regulations.

Recruit personnel initially in the EEA

If you have a company in the Netherlands and you are looking for personnel, you are obliged to recruit first of all within the European Economic Area (EEA) and / or Switzerland. You will have to demonstrate that you cannot find a suitable employee in either the EEA or Switzerland before being permitted to recruit in other countries.

Apply for a work permit

If unable to find suitable personnel in either the EEA or Switzerland, you usually require a work permit for employees from Bulgaria, Romania and non-EEA countries. A work permit is not required if the worker comes from an EEA member country or from Switzerland.

The permit for highly skilled migrants enables you to bring talented employees to the Netherlands without having to prove a lack of suitable candidates in Europe. The employee should fulfill specific wage requirements.

Verify and register the identity of your employees

If you have a business in the Netherlands and employ staff, you must verify the identity of all workers on the basis of an original identity document. This applies to both Dutch and foreign workers who you employ.

Organize accommodation for foreign employees

If you have a company in the Netherlands and you employ foreign workers on a temporary basis, you will in some cases be obliged to provide suitable accommodation. This obligation applies if it is included as a provision in the Collective Labor Agreement for your business sector or if you employ workers who need a work permit.

Register as an employer with Dutch Tax Authorities

If you set up or take over a business in the Netherlands, you must register with the Dutch Tax Authorities. This happens automatically when you register your business in the Dutch Trade Register (‘Handelsregister’) at the Chamber of Commerce (‘Kamer van Koophandel’). The latter will pass on your details to the Dutch Tax Authorities. The entry in the Dutch Trade Register must take place within one week of the start of your business.

Ask your employees for a tax and social insurance number

When you register with a Dutch municipality, you will receive a citizen service number (BSN). The Dutch government uses this unique personal identification number when processing your personal data. You can use the BSN to identify yourself to government agencies, health care providers and educational institutions.

Enter into a contract of employment

A contract of employment is an agreement between an employee and an employer. You enter into a contract of employment for a fixed term (a temporary contract) or for an indefinite period (a permanent contract). A contract of employment can be agreed in writing or verbally.

The minimum wage

All employees are entitled to a minimum wage. This is reset twice a year (currently at around EUR 1,700 gross a month)

Holidays

All employees are entitled to a statutory minimum holiday allowance of 8% of their gross yearly salary. The statutory annual minimum holiday period is four times the number of working days per week. A full-time worker works five days / 40 hours per week, so the minimum days of holiday is 20 days.

Check whether you are required to deduct social insurance premiums

If you have a company in the Netherlands, you may have to deal with employee insurance schemes and national insurance, including social insurance against loss of income due, for instance, to unemployment, old age, illness or incapacity for work.

Guest houses

Everyone living in the Netherlands is entitled to a state pension when they reach pensionable age (currently 65 but increasing in stages to 67 as of 2022). Although not required by law, it is common for employees to also participate in a pension offered by the employer. In most cases, the premiums are shared between the employer and the employee (not necessarily on a 50/50 basis). Sometimes the employer has to offer a certain pension scheme to all employees based on the applicable collective bargaining agreement or a compulsory sectorial pension fund.

IR Global – Meet the Members

By Legal, Tax

The Netherlands is one of Europe’s most compelling investment opportunities, despite not being the first name on every CEO’s mind when considering international expansion. Large city regions in countries, such as the UK, France or Germany, can often have more allure as gateways into Europe, but any decision maker who fails to look beyond this established order is making a mistake. A cursory look at the credentials of The Netherlands as an investment destination, immediately shows its vast potential.

 

Download full document here: IR Global – Meet the Members – Netherlands

European Union Adopts Black List of 17 jurisdictions

By Legal, Tax

On 5 December 2017, European Union (EU) finance ministers adopted a list of “non-cooperative jurisdictions for tax purposes” also known as  ‘The Black List’. The list is part of the EU’s work to counter worldwide tax evasion and avoidance. According to the EU, it will help the EU to deal more robustly with external threats to Member States’ tax bases and to tackle third countries that consistently refuse to play fair on tax matters. The list should create a positive incentive for international jurisdictions to improve their tax systems where there are deficiencies in their transparency and fair tax standards. No EU member states fall into the list because it should be recognized as a tool to deal with external threats to Member States’ tax bases.

The list is based on three screening criteria’s: tax transparency, fair taxation (no harmful tax regimes) and implementation of BEPS minimum standards. The Black List consists of 17 countries which failed to meet agreed tax good governance standards. The following jurisdictions appear on the EU Black List: American Samoa, Bahrain, Barbados, Grenada, Guam, Korea, Macao the Marshal Islands, Mongolia, Namibia, Palau, Panama, Santa Lucia, Samoa Trinidad Tobago, Tunisia, and United Arab Emirates.

In addition to the Black List, the EU finance ministers also adopted a “Grey List”. The “Grey List” includes entities which have committed to addressing deficiencies in their tax systems and to meet the required criteria and following contacts with the EU by the year-end 2018 (or in the case of developing countries by the year-end 2019). As those jurisdictions are not blacklisted, they would not fall within any of the sanctions discussed below. The Grey List includes 47 countries, among others, EU candidates Turkey, Serbia and Montenegro, as well as Switzerland, Bosnia and Herzegovina, Macedonia, Morocco, Thailand, Vietnam and Hong Kong.

Sanctions

The jurisdictions on the final Black List may face sanctions (‘defensive measures’) imposed by the Member States in the form of (administrative) tax measures and by the EU in the form of non-tax measures.

The non-tax measures are linked to EU funding in the context of the European Fund for Sustainable Development (EFSD), the European Fund for Strategic Investment (EFSI) and the External Lending Mandate (ELM). Funds from these instruments cannot be channeled through entities in listed jurisdictions.

The European Commission recommends (not mandatory!) Member States to take tax sanctions against the EU Black Listed jurisdictions. The following defensive tax measures of legislative nature could be applied by the Member States: non-deductibility of costs, CFC rules, withholding taxes, limitation on participation exemption, switch-over rules, reversal of the burden of proof, special documentation requirements and mandatory disclosure by tax intermediaries of specific tax schemes with respect to cross-border arrangements. The European Commission does not provide any guidance on when the Member States should take the recommended sanctions.  If a Member State takes such measures, not only its domestic law but – depending on the measure – also bilateral tax treaties might have to be changed.

The Black List will be updated at least once a year. This update will be based on the continuous monitoring of Black Listed jurisdictions, as well as those that have made commitments to improve their tax systems (Grey Listed jurisdictions).

 

Proposal For UBO Register Adopted By Parliament

By Legal, Tax

On 20 May 2015, the European Parliament adopted the Fourth Money Laundering Directive. This directive obligates EU member states to adopt a UBO-register of corporate and legal entities. Such register should include at least the name, the month and year of birth, the nationality and the country of residence of the UBO, and additionally, the nature and extend of the beneficial interest held by the UBO. The register should be accessible to the respective tax authorities, obliged entities (for example banks, lawyers and notaries, as they have to perform KYC procedures) and the public if they have a “legitimate interest”.

Amendments To The Parent Subsidiary Directive Adopted

By Legal, Tax

The EU-Council of Economic and Finance Ministers have adopted the amendments to the Parent Subsidiary Directive, challenging hybrid financial instruments which have the characteristics of both debt and equity.

A payment on hybrid financial instruments could be eligible for tax deduction in the state of source, and at the same time, be tax exempt in the state of residence (double non-taxation). The adopted amendments provide for a mandatory limitation of the exemption in the state of residence, to the extent the (interest) payments are deductible in the state of source.

All EU member states are required to implement the amendments in their domestic legislation no later than 31 December 2015.