As a (start-up) business owner, you always see opportunities. Priority usually goes to acquisition and bringing in new assignments, or selling your product. You work day and night to make your business a success, but that can suddenly change from one day to the next, without you having any influence over it.<\/p>\n
For example, you make a risky investment that suddenly turns out badly due to changing market conditions, the tax authorities come knocking because your bookkeeper did not keep your accounts in proper order, your most important customer cancels, your business partner or key employee falls ill, or a pandemic breaks out.<\/p>\n
A sensible (start-up) business owner therefore looks into how to protect themselves and their assets and investments against these unexpected risks. Below is an overview of the most important legal points of attention and which legal documents are indispensable for this. In this article, we limit ourselves to the private limited company (B.V.), by far the most common legal form in the SME sector.<\/p>\n
First, it can be wise for you as a business owner to house the company carrying out the business activities in a so-called operating company B.V. This protects your private assets against claims from trade creditors, the companies to whom you pay invoices from your business. Tax-wise, however, this can work out unfavorably if you do not make a sufficient profit margin. Also seek advice from a tax advisor on this. Sometimes, however, the aforementioned business risk can be so great, or you may find it so important to protect your private assets against business debts, that you accept the tax disadvantage. It is also the case that a B.V. is often valued more highly commercially than a sole proprietorship. It gives off a more professional image.<\/p>\n
In addition, it can be valuable to set up a holding company directly above the operating company. You can then house valuable assets (think of trademark rights, copyrights, patents, business premises, vehicles, expensive company machinery, etc.) in it and lease them to your operating company. Should your operating company go bankrupt, this in principle has no impact on the assets in your holding company. After all, the business risks rest with the operating company, and since the holding company is treated as a separate entity, the operating company’s creditors cannot simply make claims against the holding company.<\/p>\n
Furthermore, the holding company combined with the operating company also offers tax advantages (provided sufficient profit is made). For example, thanks to the participation exemption, dividend distributions from the operating company to the holding company are tax-free.<\/p>\n
Do keep in mind that this structure involves notarial incorporation costs, as well as the annual costs of bookkeeping and annual accounts for two B.V.’s, but those costs are, in themselves, manageable. Nowadays there are very good providers specializing in bookkeeping for holding-operating company structures.<\/p>\n
For the remainder of this article, we will assume that you have set up a holding company that holds 100% of the shares in the operating company. From a legal and tax perspective, you are required to set out both your employment relationship and your corporate relationship with your holding company and operating company in writing. As a director and majority shareholder (DGA), you must enter into a DGA employment contract with your holding company. In this you arrange matters such as salary, working hours, disability, insurance, etc., so that the Tax Authorities can see that, as an employee, you are “employed” by your holding company. A special DGA scheme applies to this, of course (Government Gazette 2015, 19073 | Overheid.nl > Official announcements (officielebekendmakingen.nl)<\/a>), so that you do not have to pay employee contributions for unemployment insurance (WW), sickness benefits (ZW), the WAO and the WIA, etc. Such an employment contract is also important in order to qualify for tax advantages.<\/p>\n Second, it is important to conclude a management agreement between your holding company and the operating company. This states that your holding company has been appointed as the statutory director of the operating company and will carry out the management activities within the operating company. The operating company pays a management fee to the holding company for this. The holding company invoices this management fee monthly to the operating company for an amount x, exclusive of VAT. This creates a legally correct title for drawing the necessary income from the operating company into the holding company. From this management fee, your holding company then pays you personally the salary from the DGA employment contract, and the holding company also pays the monthly payroll tax to the tax authorities.<\/p>\n If you do not set this out in writing, these paid amounts can be regarded as current-account withdrawals, a kind of loaned funds that the operating company lends to the holding company. If the operating company goes bankrupt, it will in the meantime have built up a large claim against the holding company. The bankruptcy trustee of the operating company will then immediately demand repayment of that current-account debt from the holding company. After all, that current-account debt is also not set out in writing. It is often only recorded in the bookkeeping. That means the debt is immediately due and payable, and commercial interest is also charged on it. It may also be that the tax authorities view these distributions as disguised dividend or a gift, and subsequently impose additional tax assessments on the holding company or on you personally.<\/p>\n It is actually quite common for amounts to be transferred back and forth between you as DGA and the holding company, or between the holding company and the operating company. To avoid the problem with a bankruptcy trustee described under point 2, it is always wise as a business owner to draw up one or two current-account agreements. This agreement records in writing that all monetary claims and debts that the holding company and the operating company, or the DGA, have against each other are automatically set off against one another. It also sets out and pays a commercial rate of interest. And to the extent any debts remain, it is agreed that these cannot be demanded all at once.<\/p>\n In addition to a commercial interest rate, the current-account agreement also sets out the term, repayment, the enforceability of claims and debts, and the maximum permitted current-account amount.<\/p>\n If you are in a B.V. together with one or more business partners (shareholders), it is crucial to draw up a shareholders’ agreement. For successful cooperation within a business, you need to record mutual agreements, expectations, and responsibilities, since these are not set out in the articles of association. This agreement then serves as a supplement to the articles of association.<\/p>\n Topics frequently addressed in shareholders’ agreements include, among other things, excluding the transferability of shares for a number of years (lock-up), more extensive obligations to offer shares for sale, the right to co-sell shares when another shareholder sells their shares (drag-along, tag-along), the requirement that a director must first submit special management decisions for approval to all shareholders, the requirement that special shareholder resolutions can only be adopted unanimously or by a special majority of votes, non-compete or non-solicitation clauses after the sale of shares, dividend policy, investment policy, etc.<\/p>\n In addition to the aforementioned solid legal foundation for protection within the holding structure, it is important to also limit the external risks your business faces. For that purpose, the following tailor-made legal documents with external effect are the absolute minimum:<\/p>\n The lawyers at The Legal Company<\/a> are experts in all of the aforementioned contracts and, more broadly, specialize in corporate law, contract law, employment law, and privacy law. We are happy to help protect your business to the fullest. Feel free to contact us via info@thelegalcompany.nl<\/a> or call 020-345 0152 to schedule an appointment.<\/strong><\/p>\n Nothing changes as constantly as laws and regulations. Please note that our blogs may no longer align with current laws and regulations and may therefore be outdated. If you have questions or an issue relating to this blog, or would like legal assistance, please contact us.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" As a (start-up) business owner, you always see opportunities. Priority usually goes to acquisition and bringing in new assignments, or selling your product. You work day and night to make your business a success, but that can suddenly change from one day to the next, without you having any influence over it. For example, you […]<\/p>\n","protected":false},"author":2,"featured_media":23836,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"page_builder":"","footnotes":"","_et_pb_custom_css":""},"categories":[209],"tags":[],"class_list":["post-29637","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-law"],"acf":[],"_et_pb_custom_css":"","yoast_head":"\n3. Current-account agreement<\/strong><\/h5>\n
4. Shareholders’ agreement<\/strong><\/h5>\n
5. Other must-do’s to limit risks<\/strong><\/h5>\n
\n
\n