Exiting from a vof as a partner; what should you arrange?

You are a partner in a vennootschap onder firma (vof). Now you no longer want or are unable to continue working together with your co-entrepreneur(s). You have made that choice yourself or together. You will resign as a partner. Read what you need to think about and arrange.

Inform your fellow partner(s)

Have you decided to quit as a vennoot (partner)? Then you must inform the other partner or partners. At the start of the vof, you made agreements about the cooperation. These agreements are often set out in a vof contract. The way in which you end the partnership is probably also described in it. Is nothing written down? Then you can choose how to end. It is wise to do so in writing. You have to give your notice to each partner. 
The main rule when a partner leaves is that the vof stops and is dissolved. The assets of the vof are distributed. There may be other agreements in the partnership contract. 

Find out what the financial impact will be

The general partnership (vof) contract may contain agreements on the distribution of profits and losses. And about the payment of your capital in the vof. The vof must therefore draw up a final balance sheet with the actual values at the time of termination. This is called the fair values. In this way, you make non-visible capital gains visible. For example, hidden reserves and goodwill. This is a kind of profit you make and is called discontinuation profit. You have to pay income tax on this discontinuation profit.
Will your partner(s) continue the business? Investigate whether you can use the doorschuiffaciliteit (transfer facility, under: Other takeover options). The remaining partn(s) continue with the values from the administration of the vof, the book values. This is interesting in case of large hidden reserves. Your partner takes over your tax obligation. You will receive less payout from the continuing partner.

Have you built up a fiscal old-age reserve (FOR)? If you stop doing business and do nothing with it, the sum you have saved is released. That means the FOR amount is added to your profit for that year. You have to pay tax on that. 

Has the vof taken out financing or credit? If so, also inform the financier about the leaving partner.

Negotiate and make arrangements

Consult with the other partner or partners about the moment of resignation, the conditions of resignation and the payment schedule. Record the agreements you make in writing and signed in an agreement. Do you want to continue doing business on your own? Then make proper arrangements. For example, whether or not certain customers will join you. Put all agreements in writing in a non-competition and/or non-solicitation clause signed by all partners.

Continuing the business

The partnership agreement usually includes a continuation clause. This clause stipulates that the other partner or partners can continue the company if you terminate the partnership. Does the legal structure change after the continuation? Then current contracts in the name of the current vof must be adapted to the new situation. The new company will also get a new KVK number. This may also affect licences and contracts.

Firing staff

Does the vof have staff? Then check whether you need to apply for a dismissal permit and report the dismissal to the Tax Administration. Always put agreements on the takeover of staff by you or the other partner(s) in writing and signed. If staff start working for the other partner, they must draw up a new employment agreement in the name of the new company.

Liability

Within the vof, each partner is fully liable for the actions and debts of the vof. After quitting, you remain liable for the debts from the period you were a partner. You can make agreements with your partners about those debts, but those agreements only work between you as partners. Creditors from outside the vof can still sue you for performance or payment. You can also try to make agreements with the creditors of the vof to prevent this. 
Report your resignation to the KVK immediately. You remain a partner and therefore liable until you deregister from the Business Register. 

Deregister from the Business Register

Deregister as a partner from both the Business Register and the UBO Register. After deregistration, you are no longer authorised to act on behalf of the vof. Does only one partner remain after your deregistration? Then the vof cannot continue to exist and the successor must choose a different legal structure. 
To deregister the vof, you must first dissolve it. The KVK informs the Netherlands Tax Administration that you are ending. The Netherlands Tax Administration will send you a letter about the consequences for income tax and VAT. 
To deregister a partner, fill in 2 forms:

• Deregister an official. The exiting partner fills in this online form (in Dutch).
• Deregister UBO (in Dutch)

Is there only one partner left after you resign? Then the vof also stops and you and your partner report this:

• Dissolve the vof. The continuing partner indicates on this form that they will continue the company. 

The partner who wants to continue has to register the new business. Depending on the legal structure, they have to fill in the correct registration form. The new business will receive a net KVK number and new VAT numbers from the Tax Administration.  

Change or cancel insurance policies

Consider whether you want to continue any insurance policies you have taken out (such as AOV, partner's insurance, pension). After KVK processes your exit, you will receive a confirmation of the change. With this, you can cancel business insurances you no longer need. Adjust insurances you want to keep to the new situation.

Settle VAT and income tax

Is the general partnership dissolving? Then the vof will receive a letter from the Tax Administration for the last VAT return. Once the last VAT return has been filed, the Tax Administration will send a final confirmation of deregistration of the vof as a VAT entrepreneur. If the vof continues to exist, this does not happen. 
After the end of the calendar year, you file your income tax return. Did you meet the hour criterion of 1,225 hours in the year you quit the vof? Then you can still make use of the entrepreneur's allowance. 

Keeping records

After leaving as a partner, you have to keep your records for at least 7 years. In some cases, the retention obligation is 10 years. This depends on the type of data.