What is a legal form (“rechtsvorm”)?

A legal form is the legal structure you choose for your company. When registering with the Chamber of Commerce (KVK), you must specify this type of business. This choice determines, among other things, how much liability you have for debts and tax obligations.

Legal forms with legal personality:

Legal forms with legal personality require a notary to be involved in their establishment. As the owner of the company, you are not personally liable for the debts. For example, if the company goes bankrupt, you do not have to pay the debts with your own money. Moreover, the tax burden is lower for these types of business forms if the profit exceeds 100,000 euros.

  • Private Limited Company (BV): A BV is a business form where the capital is divided into shares. The owners are liable only up to the amount they have invested.
  • Public Limited Company (NV): An NV is similar to a BV, but the shares can be freely traded on the stock exchange.
  • Association: An association is a collaboration with a common goal, without profit motive. Members have limited liability.
  • Cooperative: A cooperative is a business form where members are joint owners and collaborate for the collective interest.
  • Foundation: A foundation is an organization with a specific purpose, without profit motive. It has no members or shareholders but does have a board.

Legal forms without legal personality:

With these business forms, you are personally responsible. If the company goes bankrupt and has many debts, you are personally responsible for paying these debts. The advantage is that you do not need a notary to start this type of business. Up to approximately 80,000-100,000 euros in profit, this business form is more fiscally advantageous.

  • Sole Proprietorship: In a sole proprietorship, one person is the owner and liable for all debts of the business with their personal assets.
  • General Partnership (VOF): A VOF is a collaboration between two or more individuals or parties, where all partners are jointly liable for the debts of the business.
  • Limited Partnership (CV): A CV is a form of partnership where managing partners are actively involved in the management of the business, and silent partners only contribute financially.
  • Partnership: A partnership is a form of collaboration between multiple independent entrepreneurs, where they jointly practice a profession or business. Each partner is jointly liable for the debts of the partnership.

Choose carefully, considering the impact of the chosen legal form on your business and personal responsibilities. Seek advice from a tax specialist or accountant.