KYC (Know Your Client) requirements are an essential aspect of conducting business in the Netherlands. These requirements help businesses ensure compliance with national and international regulations, prevent money laundering, and safeguard against illicit activities. In this comprehensive guide, we will explore the various aspects of KYC requirements in the Netherlands, including legal entities, incorporation processes, tax obligations, annual maintenance, and more.

Table of Contents

1. Introduction to Know Your Client (KYC) Requirements
2. Legal Entities in the Netherlands
   • Branch Office
   • B.V. (Private Company with Limited Liability)
   • Co-operative U.A.
   • C.V. (Limited Partnership)
3. Entity Set-Up
4. Minimum Capital Requirement
5. Legal Liability
6. Tax Presence
7. Incorporation Process
8. Business Recognition
9. Shareholder and Board Meeting Requirements
10. Annual Corporate Maintenance Requirements
11. Director and Officer Requirements
12. Local Corporate Secretary Requirement
13. Local Legal or Admin Representative Requirement
14. Local Office Lease Requirement
15. Other Physical Presence Requirements
16. Sufficiency of Virtual Office
17. Provision of Local Registered Address by Law Firm or Third-Party Service Provider
18. Provision of Local Director or Corporate Secretary by Law Firm or Third-Party Service Provider
19. Nationality or Residency Requirements for Shareholders, Directors, and Officers
20. Restrictions Regarding Appointment of Nominee Shareholders or Directors
21. Summary of Director’s, Officer’s, and Shareholder’s Authority and Limitations Thereof
22. Public Disclosure of Identity of Directors, Officers, and Shareholders
23. Minimum and Maximum Number of Directors and Shareholders
24. Minimum Number of Shareholders Required
25. Removal of Directors or Officers
26. Required and Optional Officers
27. Board Meeting Requirements
28. Quorum Requirements for Shareholder and Board Meetings
29. Opening a Bank Account
30. Conclusion

KYC Requirements

Know Your Client (KYC) requirements refer to the due diligence measures that businesses must undertake to verify the identity, credibility, and integrity of their clients. These requirements are essential to prevent money laundering, terrorist financing, and other illicit activities. In the Netherlands, KYC regulations are governed by national legislation and international standards, such as the Financial Action Task Force (FATF) recommendations.

KYC requirements involve collecting and verifying various types of information, including identification documents, proof of address, beneficial ownership details, and the purpose and nature of the business relationship. Additionally, businesses must regularly update and monitor client information to ensure ongoing compliance.

Legal Entities in the Netherlands

When conducting business in the Netherlands, it is essential to understand the different types of legal entities available. Each legal entity has its own characteristics and requirements. The most common types of legal entities in the Netherlands are:

Branch Office

A branch office is not a separate legal entity but a local office of a non-Dutch legal entity established in the Netherlands. The branch office operates under the governing law of the head office and must be registered in the Dutch Trade Register. The branch office is subject to the regulations and reporting requirements of the head office’s governing law.

B.V. (Private Company with Limited Liability)

A B.V. is a separate and distinct legal entity, managed by a board of directors responsible for making major business decisions and overseeing day-to-day operations. Directors are appointed by the shareholders, and a B.V. can have a supervisory board to oversee the policies of the board of directors. A B.V. requires filing annual accounts with the Dutch Trade Register.

Co-operative U.A.

A Co-operative U.A. is a separate and distinct legal entity managed by a management board. Similar to a B.V., a Co-operative U.A. can have a supervisory board and requires filing annual accounts with the Dutch Trade Register. Members of the Co-operative U.A. are appointed by the members, and a Co-operative U.A. can have a 1-tier board structure consisting of executive and non-executive directors.

C.V. (Limited Partnership)

A C.V. is a partnership agreement between general partners and limited partners and is not a separate legal entity. The general partner has overall management and day-to-day responsibility, while the limited partner’s liability is limited to their contribution. A C.V. requires filing annual accounts with the Dutch Trade Register only if all its general partners are foreign capital companies.

Entity Set-Up

The process of setting up different legal entities in the Netherlands varies. Here’s an overview of the entity set-up process for each type:

Branch Office

Establishing a branch office involves a resolution from the head office to establish a branch, followed by registration in the Dutch Trade Register. Notarized and apostilled copies of the head office’s charter documents, an apostilled extract from the local commercial register, and notarized passport copies of directors and proxy holders must be submitted.

B.V. (Private Company with Limited Liability)

Setting up a B.V. requires executing a deed of incorporation, including articles of association before a civil law notary in the Netherlands. The notary files the articles of the B.V. and details of directors, ultimate beneficial owners, and shareholders with the Dutch Trade Register. The B.V. must also maintain a shareholders’ register.

Co-operative U.A.

To establish a Co-operative U.A., a deed of incorporation with articles of association must be executed before a civil law notary. The notary files the articles of the Co-operative U.A. and details of board members and ultimate beneficial owners with the Dutch Trade Register. A members’ agreement and a members’ register must also be maintained.

C.V. (Limited Partnership)

Establishing a C.V. involves executing a partnership agreement between general and limited partners. The notary files details of the C.V., general partners, and ultimate beneficial owners with the Dutch Trade Register. The partnership agreement may include the election of a management committee for day-to-day business activities.

Minimum Capital Requirement

The minimum capital requirement varies for different legal entities in the Netherlands. Here’s a summary of the minimum capital requirement for each type:

Branch Office

The minimum capital requirement for a branch office is determined by the governing law of the head office.

B.V. (Private Company with Limited Liability)

A B.V. does not have a minimum capital requirement, and the issued capital can be as small as EUR 0.01. The typical charter documents include articles of incorporation, and a B.V. must file annual accounts with the Dutch Trade Register.

Co-operative U.A.

A Co-operative U.A. does not have a minimum capital requirement. The membership agreement or articles may require members to make initial or additional equity payments. Similar to a B.V., a Co-operative U.A. must file annual accounts with the Dutch Trade Register.

C.V. (Limited Partnership)

A C.V. does not have a minimum capital requirement as long as each partner contributes capital or other assets as agreed. A C.V. only needs to prepare and file annual accounts with the Dutch Trade Register if all its general partners are foreign capital companies.

Legal Liability

The legal liability of different legal entities in the Netherlands varies. Here’s an overview:

Branch Office

The legal liability of a branch office is determined by the governing law of the head office.

B.V. (Private Company with Limited Liability)

Shareholders of a B.V. are generally not personally liable for the company’s debts, except for their financial contributions to the B.V.

Co-operative U.A.

Members of a Co-operative U.A. are not personally liable for the company’s debts, except for their financial contributions to the Co-operative U.A.

C.V. (Limited Partnership)

A general partner of a C.V. is jointly and severally liable for the partnership’s debts, while the liability of a limited partner is limited to their contribution, provided they do not act on behalf of the C.V. toward third parties.

Tax Presence

Understanding the tax presence requirements is crucial when doing business in the Netherlands. Here’s an overview:

Branch Office

Entities that are not residents of the Netherlands for tax purposes are subject to Dutch corporate income tax only if they derive income and realize gains from specific Dutch sources, such as a permanent establishment.

B.V. (Private Company with Limited Liability)

Dutch corporate income tax is imposed on the worldwide profits of a B.V. The tax rate is 19% on the first EUR 200,000 of taxable profit and 25.8% on taxable profit exceeding EUR 200,000. Certain benefits derived from participations in other entities are exempt from Dutch corporate income tax.

Co-operative U.A.

Dutch corporate income tax is imposed on the worldwide profits of a Co-operative U.A. The tax rates are the same as those for a B.V., and certain benefits derived from participations are exempt from Dutch corporate income tax.

C.V. (Limited Partnership)

The tax status of a C.V. can be either transparent or opaque from a Dutch tax perspective, depending on the partnership agreement. Last modified 25 May 2023

Incorporation Process

The incorporation process for different legal entities in the Netherlands varies. Here’s an overview:

Branch Office

A branch office is established by a resolution of the head office, followed by registration in the Dutch Trade Register. Notarized and apostilled copies of the head office’s charter documents, an apostilled extract from the local commercial register, and notarized passport copies of directors and proxy holders are required for registration.

B.V. (Private Company with Limited Liability)

To incorporate a B.V., a deed of incorporation with articles of association must be executed before a civil law notary. The notary files the articles of the B.V. and details of directors, ultimate beneficial owners, and shareholders with the Dutch Trade Register. A shareholders’ register must be maintained.

Co-operative U.A.

To incorporate a Co-operative U.A., a deed of incorporation with articles of association must be executed before a civil law notary. The notary files the articles of the Co-operative U.A. and details of board members and ultimate beneficial owners with the Dutch Trade Register. A members’ agreement and a members’ register must be maintained.

C.V. (Limited Partnership)

To establish a C.V., a partnership agreement must be executed. The notary files details of the C.V., general partners, and ultimate beneficial owners with the Dutch Trade Register. The partnership agreement may include provisions for the election of a management committee.

Business Recognition

Different legal entities in the Netherlands enjoy varying levels of business recognition. Here’s an overview:

Branch Office

A branch office is widely recognized and commonly used for conducting business in the Netherlands.

B.V. (Private Company with Limited Liability)

A B.V. is well regarded and widely used for businesses in the Netherlands.

Co-operative U.A.

A Co-operative U.A. is well regarded and widely used for businesses in the Netherlands.

C.V. (Limited Partnership)

A C.V. is widely used for conducting business in the Netherlands. Last modified 25 May 2023

Shareholder and Board Meeting Requirements

Different legal entities in the Netherlands have specific requirements for shareholder and board meetings. Here’s an overview:

Branch Office

The requirements for shareholder and board meetings of a branch office are determined by the governing law of the head office.

B.V. (Private Company with Limited Liability)

A B.V. is required to hold annual shareholder meetings to vote on certain items, such as the appointment of directors and the adoption of annual accounts.

Co-operative U.A.

A Co-operative U.A. is required to hold an annual meeting of members to vote on certain items, such as the appointment of board members and the adoption of annual accounts.

C.V. (Limited Partnership)

A C.V. usually includes requirements for an annual partners’ meeting, as determined by the partnership agreement.

Annual Corporate Maintenance Requirements

To maintain compliance, legal entities in the Netherlands have annual corporate maintenance requirements. Here’s an overview:

Branch Office

The annual corporate maintenance requirements for a branch office are determined by the governing law of the head office.

B.V. (Private Company with Limited Liability)

A B.V. is required to hold annual director and shareholder meetings to fulfill its corporate maintenance requirements.

Co-operative U.A.

A Co-operative U.A. is required to hold annual management board and members’ meetings to fulfill its corporate maintenance requirements.

C.V. (Limited Partnership)

The annual corporate maintenance requirements for a C.V. depend on the provisions of the partnership agreement.

Director and Officer Requirements

Different legal entities in the Netherlands have specific requirements for directors and officers. Here’s an overview:

Branch Office

The requirements for directors and officers of a branch office are determined by the governing law of the head office.

B.V. (Private Company with Limited Liability)

A B.V. must have at least one director. Tax substance rules require that at least 50% of the board consist of Dutch tax resident directors. The appointment of officers (proxy holders) is optional.

Co-operative U.A.

A Co-operative U.A. must have at least one board member. Tax substance rules require that at least 50% of the board consist of Dutch tax resident directors. The appointment of officers (proxy holders) is optional.

C.V. (Limited Partnership)

A C.V. must have at least one general partner and one limited partner. The appointment of officers (management committee members) is optional.

Local Corporate Secretary Requirement

Legal entities in the Netherlands do not have a requirement for a local corporate secretary.

Local Legal or Admin Representative Requirement

Legal entities in the Netherlands may appoint a local legal or admin representative. Dutch trust companies commonly provide these services.

Local Office Lease Requirement

Legal entities in the Netherlands are required to have an office address for incorporation. The office address must be registered in the Dutch Trade Register.

Other Physical Presence Requirements

Legal entities in the Netherlands do not have specific physical presence requirements beyond the office address.

Sufficiency of Virtual Office

Virtual offices are not sufficient to meet the legal requirements for legal entities in the Netherlands. A physical office address is necessary for incorporation and compliance purposes.

Provision of Local Registered Address by Law Firm or Third-Party Service Provider

Law firms in the Netherlands are not allowed to provide local registered addresses. However, trust companies can provide these services.

Provision of Local Director or Corporate Secretary by Law Firm or Third-Party Service Provider

Law firms in the Netherlands are not allowed to provide local directors or corporate secretaries. Trust companies commonly provide these services.

Nationality or Residency Requirements for Shareholders, Directors, and Officers

There are no nationality or residency requirements for shareholders, directors, or officers of legal entities in the Netherlands.

Restrictions Regarding Appointment of Nominee Shareholders or Directors

The use of nominee shareholders is not recognized in the Netherlands. Nominee directors are also not allowed.

Summary of Director’s, Officer’s, and Shareholder’s Authority and Limitations Thereof

The authority and limitations of directors, officers, and shareholders vary depending on the legal entity. Directors and officers are responsible for making major business decisions and overseeing day-to-day operations. Shareholders exercise their authority through voting rights and can adopt resolutions that impact the company’s affairs.

Public Disclosure of Identity of Directors, Officers, and Shareholders

The identity of directors and officers is publicly disclosed through registration in the Dutch Trade Register. Shareholders’ identities are only disclosed if they hold 100% of the shares. Ultimate beneficial owners’ identities, although registered, are not currently publicly disclosed, but this may change in the future.

Minimum and Maximum Number of Directors and Shareholders

The minimum and maximum number of directors and shareholders vary depending on the legal entity. A branch office does not have specific requirements, while a B.V. requires a minimum of one director and has no maximum limit. A Co-operative U.A. requires a minimum of two members, and a C.V. requires a minimum of two partners (at least one general and one limited partner).

Minimum Number of Shareholders Required

A branch office does not have specific requirements for the number of shareholders. A B.V. requires a minimum of one shareholder. A Co-operative U.A. requires a minimum of two members, and a C.V. requires a minimum of two partners (at least one general and one limited partner).

Removal of Directors or Officers

Directors and officers can be removed by a resolution of the shareholders’ meeting or the meeting of members, depending on the legal entity.

Required and Optional Officers

The appointment of officers is optional for legal entities in the Netherlands. In a B.V., officers (proxy holders) can be appointed, while in a Co-operative U.A., officers (proxy holders) can be appointed. A C.V. does not have specific requirements for officers.

Board Meeting Requirements

Board meeting requirements vary depending on the legal entity. A branch office follows the governing law of the head office. A B.V. typically holds one annual director meeting, but additional meetings may be necessary for tax substance purposes. A Co-operative U.A. typically holds one annual board meeting, and a C.V. does not have specific board meeting requirements.

Quorum Requirements for Shareholder and Board Meetings

Quorum requirements for shareholder and board meetings depend on the legal entity. A majority of shareholders or members must be present for a meeting, unless the articles of the company state otherwise. For directors, a majority must be present, or written resolutions can be executed.

Opening a Bank Account

Opening a bank account in the Netherlands is not a requirement for incorporation. However, having a local bank account is beneficial for conducting business operations.

Conclusion

Understanding and complying with KYC requirements in the Netherlands is crucial for businesses operating in the country. By following the guidelines and regulations outlined in this comprehensive guide, businesses can ensure compliance, mitigate risks, and maintain a strong reputation. Stay informed about any updates or changes to KYC requirements to ensure ongoing compliance with national and international regulations.