General partnership (vof)

If you want to start a business with other self-employed individuals, one option is to set up a general or commercial partnership, or as it is known in Dutch a 'vennootschap onder firma' (vof). All partners bring equity into the vof in the form of cash, goods or labour, and no minimum start-up capital is required.

What is a general partnership?

A general or commercial partnership is a company in which at least 2 persons work together under one common name. Every person who participates becomes a partner. Every partner contributes something. This can be money as well as goods or labour. There is no minimum amount of capital required. Since a general partnership is not a legal corporate identity, partners are personally liable for debts. 

Note: Since 1 January 2021, the differences between general and professional partnerships (maatschappen) has ceased to exist. This has implications mostly for matters of liability for company debts, responsibility for specific contracts, and the division of profit. Read more about the new rules on Business.gov.nl.

Setting up a general partnership

It's mandatory to register your vof in the Commercial Register (Handelsregister) at the Netherlands Chamber of Commerce (Kamer van Koophandel, KVK). You can fill out the online form in advance.

Tip

It is not mandatory to draw up a partnership agreement (vennootschapscontract) , but it may come in useful. In a partnership agreement you list the agreements made about powers, equity, profit sharing, etc. It clarifies how you will do business together. You can do this yourselves; a civil-law notary is not required. A legal adviser, lawyer or accountant can also help you with this. You may have agreed certain maximum signing powers in your general partnership contract, e.g. €10,000. If you include this limit when you list your VOF in the Commercial Register, it will also apply to third parties. Doing so clarifies the amounts that partners can sign for and allows business relations to verify the information they have been given quickly and easily. If a partner enters into an agreement outside of his or her signing powers, he or she is then personally liable, not the VOF.

Tip: tool for choosing a Dutch legal structure

There are several considerations to take into account when setting up a business. Your legal structure determines your liability and which taxes you need to pay. Are you not sure whether the vof is the right legal structure for your business? Use the Tool for choosing a Dutch legal structure to find out which legal structure best suits your company.

Costs

You pay a one-time fee to register your vof in the Commercial Register. The costs for drawing up a partnership agreement differ depending on the notary or lawyer. On average, the cost are between €200 and €400. It is not mandatory to draw up a partnership agreement.

You are legally obliged to keep records. You can outsource this to a bookkeeper or accountant. The prices range from €500 to €1,000 per year.

How is a general partnership taxed?

Partners in a vof pay income tax on their own share of the profits. Each partner is a self-employed individual and may be entitled to certain tax benefits and exemptions, such as entrepreneur allowance (ondernemersaftrek), investment allowance (investeringsaftrek) for environmental investments or small projects, and a tax-deferred retirement reserve (fiscale oudedagsvoorziening). VOFs also pay VAT.

Liability

A general partnership is not a legal corporate entity. Therefore, as a partner in a vof, you'll be personally liable for its debts, even if another partner is responsible for causing the debts. Creditors initially make a claim on the business's assets and, if these are insufficient, on your partner's, then your and even your spouse's personal assets.

You can limit the effect on your spouse by drawing up a nuptial agreement.

Liability for partners entering after its formation

Be aware that a partner who enters into a partnership agreement after its formation is also liable for debts that arose before he or she joined. A new partner should therefore examine the vof's accounts fully and assess its financial position very carefully before entering into the partnership agreement.

It is, however, possible for new partners to make agreements with existing partners about how any pre-existing vof debts should be split. Partners leaving the general partnership remain jointly and severally liable for any debts incurred up to the point of leaving.

Partners can also make agreements about how debts should be split on leaving the partnership.

If your partner has personal debts, creditors are not entitled to make a claim on his or her business assets or your personal assets.

Filing annual accounts

If all managing partners in your general partnership are foreign, you will have to file your annual accounts with KVK.

UBO Register

General partnerships that register in the Dutch Commercial Register have to include their 'ultimate beneficial owner(s)' or UBOs in the UBO Register. This is one of the measures taken in accordance with the Prevention of Money Laundering and Terrorism Financing Act (Wet ter voorkoming van witwassen en het financieren van terrorisme, Wwft). Persons who have more than 25% of the company shares, more than 25% of the voting rights, and/or have the ultimate say in company matters are considered UBOs. You report your UBOs to KVK for inclusion in the UBO register. Companies that were already registered in the Commercial Register prior to the introduction of the UBO Register in September 2020 have until 27 March 2022 to register their UBOs.

Signing authority

Each partner is authorised to sign. This means that he may sign contracts or perform certain legal acts on behalf of the VOF, such as reporting a change in the Commercial Register. If you want to limit the authority of partners, you can make agreements about this in the partnership contract and the Commercial Register.

A vof can also choose to appoint power of attorney to someone else. This person is then authorised to act on behalf of the company. It can be useful to register this person in the Commercial Register. This way your business partners also know who is allowed to act on behalf of the company.

Personnel

If you hire personnel, you have to pay payroll taxes and social contributions for your personnel. If you are hiring an employee for the first time, you must register as an employer with the Dutch Tax and Customs Administration. You must also report this to KVK.

Social security and national insurance contributions

As a partner, you are entitled to an old-age pension (AOW) when you reach retirement age. You will have to supplement this pension yourself. Start as soon as possible to keep your contributions affordable.

Because you are not an employee, you are not entitled to any of the benefits available to regular employees, such as sickness, unemployment or disability benefit (ziektewet, WW and WIA respectively). It's up to you to take out disability insurance as soon as you start your business.

Health insurance is mandatory and basic cover is sufficient. You'll pay a premium to your health insurance company and a contribution as part of your tax return.

Depending on your type of business, it can be wise to take out additional insurance.

Dissolving and liquidating a general partnership

The vof ceases to exist if a partner leaves the partnership agreement or dies. However, it is possible to include a survivorship or takeover clause in the vof contract, so that the remaining partners can continue running the business, by seeking a new partner or continuing as a sole proprietorship (eenmanszaak).

When dissolving your general partnership, you have to pay any outstanding debts and return each partner's share in the partnership agreement. This is called liquidation, or in Dutch vereffening. Any surplus is then distributed to the partners based on their share in the vof's profits. If there's not enough cash in the partnership to pay any outstanding debts, the partners will have to deposit additional funds into the partnership (based on their share in the debt).

Make sure you report the changes to KVK and the Dutch Tax and Customs Administration.

Changing the legal form of your business

You can change a vof into a private limited company (bv). One of the differences is that the bv is liable for finances and possible debts. There are several ways to change a vof into a bv. These steps are similar to changing a sole proprietorship into a bv.

If a partner leaves or dies, you can change the vof into a sole proprietorship. This is only possible if the partnership agreement contains a survivorship clause or take-over clause. This ensures that the partners who remain can take over the contributions of the departed or deceased partner.

Husband-and-wife business

A husband-and-wife business (man-vrouwfirma) is simply a general partnership (vof) between spouses/partners. If the Tax and Customs Administration (Belastingdienst) views both partners as being self-employed individuals, this means that they can benefit from double tax breaks.

A disadvantage of a 'man-vrouwfirma' is that both partners are personally liable and a nuptial agreement provides no form of protection.

The Belastingdienst inspects man-vrouwfirma's very closely to check that both partners are actually active in the business for tax purposes. Both partners' involvement and input in the business have to be on an equal level.

Last updated on 20 January 2022

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