Setting up a Dutch BV company while the shareholder resides abroad is a challenge. What this challenge is about, we explain in this article.
Setting up a Dutch BV
The Dutch BV company is the equivalent of the LTD, the Limited Liability company. A company with a share capital set up via a Dutch notary. A BV company is set up in accordance with Dutch rules and regulations, hence Dutch corporate income tax is to be paid. Or is it?
BV being a Dutch tax resident
A BV company is always a tax resident in the Netherlands due to its formation under Dutch law. However, when the decisions are being made in another country, the BV company can be a tax resident of that country as well. The person of a limited company that is in charge of decision making is often the director.
This can cause issues in the situation that the incorporator, that is also the shareholder, who is also the director of the BV company. And this person is not a Dutch tax resident. That could imply the BV company is a resident of 2 countries according to my claim made above.
Being taxed in two countries is an undesired situation. Fortunately, The Netherlands has a great network of tax treaties that will avoid double taxation at the end. We might be able to guide you through these issues.
BV is not always a Dutch VAT entrepreneur
In order to get a VAT number in the Netherlands, A BV company must have activities, services or sales) in the Netherlands. If the services or sales take place in another country, according to the location definitions in the law, than a VAT number may be rejected. We can look at your business case and might be able to achieve your goals.
BV and limited liability
The limited liability is most likely the aspect that gave inspiration to incorporate the BV company. It is then important to know that the limited liability does not start until the share capital has actually been paid in the BV business bank account.
In the situation that the shareholder of the BV company is not a Dutch tax resident, Dutch banks are not willing to set up a business bank account for the BV company. That is not a desire of the Dutch banks, but an instruction from the Dutch national bank. Ofcourse such rules do not apply for giant companies like Google, Amazon or Coca Cola. And the latter hurts hard with well intended entrepreneurs that are eager to pay Dutch corporate tax. While some of the large companies do not actually pay corporate tax locally, or less than would have been expected.
Does the BV needs a Dutch business bank account?
The rule is that the share capital is paid into the BV business bank account. The rule does not state the bank account needs to be a Dutch bank account. Crucial is that the bank account is owned by the BV company. This opens opportunities we believe.
Tax is exciting
We think tax is exciting. We are excited to assist you. For the above mentioned situation we have in the office our experienced specialist in the international tax field: Hans. Hans will be able to assist you, to guide you in the set up of a BV where the shareholder is not (yet) a Dutch tax resident. Jurisprudence has provided a lot of opportunities to be able to run a Dutch BV from abroad. Contact Hans@orangetax.nl for your service need.