What does owning a BV company imply is a question you should ask yourself, or us, before you are involved. It is more than the fancy director title.
What does owning a BV company imply
I would like to go through the steps of setting up a BV company up to and including the annual obligations.
Set up of BV company – the notary
A BV company is an official public company with limited liability. Such a company can only be incorporated by a notary, a Dutch notary.
The notary will ask you about the name of the company. Important to do some research. Even if your name is Albert Heijn and you sell groceries, you cannot register a company with such a name. There was an Albert Heijn, not family of the large supermarket store, who tried and lost. Or if you think you are clever and you call your store Loods 6 based on the success of Loods 5, you will be asked to change the name. Mind the name.
What will the company be doing? What is the service you provide or the goods you sell. How much share capital will you issue. Will you have an extended first financial bookyear. Who are the directors, are they fully authorized? These questions and more are to be addressed with the notary.
We work with Buma Algera notaries, very experienced notaries, fully equipped for internationals.
BV has been incorporated
The BV has been incorporated, the notary updates the Chamber of Commerce. The Chamber of Commerce updates the Dutch tax office. The Dutch tax office will issue a corporate income tax number and often also a value added tax number (VAT). Sometimes you provide a service that is not subject to VAT, then no VAT number is issued. For instance when you set up a holding company that is a pure holding company.
The wage tax number can be applied on request.
Obligations of the BV company
We have a number of obligations the BV company needs to meet. That makes the BV stand out from the much more simple one man company.
Filing the VAT return and wage tax return is not different from the one man company. Also the bookkeeping merits are the same with the one man company. The limited liability aspect of the BV makes that the content of the annual report is different. You will see share capital and general reserve on the balance of the BV. This is not shown on the one man company balance.
That said, if the share capital of the BV company has not actually been paid by the shareholder, you also do not see this amount on the balance with the BV. Neither has the limited liability started then. Limited liability only applies when the share capital was actually paid.
The bookkeeping will result in an annual report and the shareholders meeting needs to approve this annual report. In the same shareholder minutes the board can be granted discharge for the concerning period. That implies the persons of the board cannot be held liable themselves for that period, should anything occur later. However, if the annual report is reported too late with the Chambers of Commerce, the persons of the board are always held personally liable in case of bankruptcy or things like that.
The deadline of publication of the annual report is within one year after the calendar year has finished.
Corporate income tax return
The BV company is to file a corporate income tax return within 5 months after the book year has finished. The Dutch tax office has yielded experience in this field, hence the fine for filing too late is set at EUR 5.514. The first time 50% discount is granted, as if it is a bargain, but still a lot of money for nothing.
Dividend paid out
The moment the BV has made a profit and the director was paid at least the required minimum salary, the profit is taxed with corporate income tax. The net result (after tax) is allocated to the general reserve in the shareholders meeting.
The shareholder can decide to issue him or herself a dividend. In order to do so, the shareholders meeting needs to decide on the dividend. A dividend note is to be created. Then the dividend withholding tax return is to be filed.
Very important to realize is that when a dividend paid out in the one year creates later in time insolvency issues, there is problem. That implies, the company has not enough funds to pay for the costs or tax. Too much dividend was apparently paid out. That is an economic crime with consequences. Mind the accounts!
Income tax return
In the income tax return you report the salary you earned with the BV company. If you loaned money to the BV company, the interest is taxed as income in Box 1. Dividend you received from the BV are taxed in Box 2. Via the dividend withholding tax return 15% tax was withheld, in the income tax return you pay the remainder up to 26,9% (2022). Loaned money taken from the BV are reported in Box 3.
Now your obligations have been met.
Tax is exciting
We think tax is exciting. We are excited to assist you with the setup and or running of your BV company. However, we will ask the question if a sole proprietorship would be sufficient as well. We have to ask, as the administrative costs and formalities with the sole proprietorship are much less.
The moment we learn the BV is commercially, logically or strategically the best, we are happy to serve. Our fees you find on the website, we will be glad to email them to you as well.