Choosing the right legal form for your business is a critical first step. For Indian investors, the Dutch BV is the most popular and highly recommended option.

1. The Dutch Private Limited Company (Besloten Vennootschap or BV)

This is the Dutch equivalent of a Private Limited Company and is the ideal choice for most foreign entrepreneurs.

• Limited Liability: Your assets are protected. You are only liable for the amount you invest in the company’s shares.
• Separate Legal Identity: The BV is its own legal person, meaning it can own assets, enter into contracts, and sue or be sued in its name.
• No Local Director Required: You can be the sole director and shareholder of your BV, and you do not need to be a resident of the Netherlands or the EU.
• Low Share Capital: You can start a BV with a share capital of just €0.01 (which means no minimum capital is required).

Tip for Indian Entrepreneurs: If using a Dutch BV for international tax planning, consult legal experts to comply with GAAR (General Anti-Avoidance Rules) and make the most of the DTAA (Double Taxation Avoidance Agreement).

2. The Dutch Public Limited Company (Naamloze Vennootschap or NV)

Ideal for large corporations seeking to raise capital from the public by listing shares on a stock exchange.

• Share Capital: Requires a minimum share capital of €45,000.
• Liability: Offers limited liability to shareholders, protecting their assets from business debts.
• Regulation: Subject to strict Dutch corporate law regulations, including requirements for a supervisory board (Raad van Commissarissen) in addition to the management board (Raad van Bestuur) for larger entities.
• Shares: NV shares are freely transferable, including on stock exchanges.

3. Branch Office

This involves registering your existing Indian company as a branch in the Netherlands. The Branch Office is not a separate legal entity, and your parent company bears full responsibility.

• Registration: Must be registered with the Dutch Commercial Register (Handelsregister).
• Taxation: Subject to Dutch tax regulations. Profits are generally taxable in the Netherlands, though double taxation treaties can provide relief. No withholding tax on transfers of profits from the branch to the head office.
• Financial Reporting: Branch financial statements typically do not need to be published in the Netherlands, but the parent company’s financial statements often do.

4. Sole Proprietorship (Eenmanszaak)

A simple and direct structure for individual entrepreneurs, the Sole Proprietorship does not provide liability protection, making the owner personally accountable for all business debts.

• Suitability: Generally used by freelancers and small business owners who are residents of the Netherlands.
• Setup: Straightforward to establish, requiring registration with the Dutch Commercial Register.
• Taxation: Profits are taxed under personal income tax. Eligible for various tax benefits and deductions for entrepreneurs if certain conditions (like the “hours criterion” of 1225 hours/year) are met.
• Administrative Burden: Lower administrative burden compared to limited liability companies.

5. General Partnership (VOF)

This structure is for two or more business partners who will share unlimited personal liability for the business’s debts, similar to a sole proprietorship for multiple individuals.

• Agreement: Formed by an agreement between partners. A written partnership agreement is highly advisable to define roles, responsibilities, and profit sharing.
• Capital: No minimum capital requirement.
• Registration: Must be registered with the Dutch Commercial Register.
• Taxation: Each partner pays income tax on their share of the profits. Partners may qualify for individual tax benefits similar to those for sole proprietorships.