Why Branch Registration in the Netherlands is Important to consider as option to enter a new market
Registering a branch is an efficient, cost-effective way to expand your business into a foreign market. The Netherlands, with its robust...
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How do you increase the share capital of your BV or NV?
Due to current legislation, a minimum capital of € 0.01 is sufficient to start a Dutch Private Company such as the BV. However, this kind of capital won’t get you far…
It may therefore be advisable to increase the issued share capital of the BV. In that case, investments can be paid from your own resources. It can also be important for the bank or for contract parties that the BV deals with, that the share capital is increased. This increases the possibilities for recourse, which lowers the threshold for doing business with the BV.
The capital of your Dutch BV can be increased by issuing shares or paying a share premium. Shares can only be issued by notarial deed.
Why would you increase the share capital of your Dutch company?
increasing the resilience of the company
replacing debt with equity
dividend stabilization
expansion of activities
By increasing the issued share capital you increase the creditworthiness of the BV. The BV also has more room to invest with its own resources. If you have sufficient (share premium) reserves in your BV, you may convert them into share capital. Without an auditor's report!
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Options to increase your share capital
It's not usual to increase the share capital of a Netherlands company or amount of shares, if effectively no extra shareholders are involved. The informal share capital (share premium) is a very common alternative.
Share capital and share premium are both considered to be part of the equity of a BV and there is no difference in the tax consequences. Share capital can be increased by issuing new shares, and by paying up issued shares in cash or in kind.
Share premium can be brought into a company by a contribution in cash or in kind on the existing shares of a company. This cash can be simply brought into the company by means of a bank transfer, with the appropriate payment description (capital deposit, by such shareholder).
Under Dutch accounting standards, all transactions of an entity with its shareholders that affect the financial relationship between these parties should reflect in the equity of the company. The issuance of shares for the Dutch company and share premium contribution should both be considered as equity. Either option, will not impact the Profit or Loss account.
According to the Dutch accounting standards, capital contributions made by current shareholders on account of their financial relationship to the entity that are executed conducted without actual disbursement of new shares (or rights to receive or call shares) are to be recognized as share capital premium (in Dutch: agio). In the Financial statements the incoming capital under ‘share premium contribution’ is visible under ‘Equity’ on the balance sheet.
Share premium and share capital redemption
Both options to deposit the capital can be redeemed at a later stage without any dividend withholding taxes being levied.
In case of liquidation, redemption of share capital can be executed without any formalities and in a tax neutral way. In case the company will be continued, the share capital can only be executed in a tax neutral way by means of a decrease of the nominal value of the shares. This decrease of the nominal value can only be realised by means of a notarial deed. In case of a decrease of the nominal value of the shares with 50 per cent, an amount equal to 50 per cent of the initial share capital can be distributed to the shareholder.
A contribution of share premium will require a share premium contribution agreement concluded between the shareholder and the company, plus a shareholder’s resolution. There is no registration of share premium with the Dutch trade register or in the shareholders register. After the conclusion of the share premium contribution agreement and adoption of the resolution, the share premium can be paid by the shareholder to the company by means of a transfer. As there are not many formalities, a share premium contribution can, in case of urgency, be executed within a day.
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How to increase your company’s capital via a Dutch notary
The increase of a company’s share capital requires the involvement of a Dutch notary.
After the execution of shares transfer, or issuance of new shares, the notary will take care of the registration of the increase of share capital at the Dutch trade register. After the execution of the deed, the newly issued shares can be paid up by the shareholders by means of a transfer to the company.
New shares: You can increase the share capital of the BV by issuing new shares. This is possible up to the amount of the authorized capital as stated in the articles of association of the BV. If the issued capital of the BV is € 18,000, the authorized capital can never exceed € 90,000. If the intention is to issue shares above that amount, the articles of association of the BV will first have to be amended.
Shareholder meeting resolution: The resolution to issue new shares must be taken at the meeting of shareholders. That decision must be recorded in writing! It should be clearly stated how many shares are issued and at what price. This is usually at 100%, so equal to the nominal value of the shares.
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Pay up your new share capital
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It is also necessary to decide how the new shares will be fully paid up. This is possible by payment in cash. No bank statement is required for the issue of shares after the BV has been established.
However, the shares can also be paid up by transfer of goods (in kind contribution) to the BV. This can be, for example, machines, means of transport or commercial premises.
A claim that the shareholder has on a third party can also be transferred to the BV. In that case, however, an auditor's report is required. The auditor must then certify that the value of the property or claim is at least equal to the value of the new shares.
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Category | Business Formation
This article will inform you on the different types of Dutch legal entities
How to start a sole proprietorship in the Netherlands in a few simple steps.
A holding company is really just a BV (Private Limited Company).
In this article we will explain you the details of the Formation Deed, and why they are so important.
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Our Services
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What is House of Companies?House of Companies is in first instance a new concept in offering flexible office solutions and registered office addresses, covering more than 4.000 locations. Aside from full service office facilities (from dealing with your mail, to answering the phone) , we offer a ‘branch out membership’ which provides you the tools to start a new business, or keep your business running, at the lowest costs possible. House of Companies is located at an amazing mansion, on a 50.000m2 estate in the Netherlands offering room for hundreds of companies. But we also offer +4.000 locations in cooperation with partners.
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Can anybody use the services of House of Companies?Yes, basically anybody can use the services of the House of Companies. Even if you are not an entrepreneur yet! Our services are very low-key which allows companies of any sizes to expand overseas. We do have a strict onboarding process in place, and don’t deal with companies focused on tax avoidance, or who have operations in sanctioned countries, as well as certain sensitive industries.
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Is using a registered office address legal?Yes, 100% legal! Our team has over 10 years experience in providing registered office services, and our locations meet the standards of the Dutch Chamber of Commerce. Our locations provide a full time reception, and our locations are always able to provide you a working space when need be.
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Do I pay taxes when I use a virtual office in the Netherlands?A ‘virtual office’ typically does not pay taxes (yet). This is not due to a special tax status, but simply because a virtual office has no actual operations (or substance) yet (or has not started to make a profit, doing sales, or employing staff). In fact, a ‘virtual office’ is typically considered a ‘representative office’ and is not required to be registered at the Chamber of Commerce. Such requirements might change, once you perform any actual services from the Netherlands, or goods are stored and processed here. In case of doubt, it might be necessary to discuss your situation with a lawyer or accountant, but much information on this topic is available in our Dashboard.
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Does a Dutch company require a local address?In many cases a local company registration requires a local business address. Especially in (Western) European countries this is very common. There are some exceptions, especially in case of a branch registration (or a representative office). A registered office address is required to receive official government letters, and in come cases also to open a local corporate bank account.
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Can my Dutch business open a bank account?Yes, a business dealing on the Dutch market can also open a corporate bank account. However, this is becoming more challenging. House of Companies can inform you about European banks that can open bank accounts for any kind of European entity, without a visit to the bank required.
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When is a registered office address convenient for me?A registered office address is convenient for any kind of business, that is planning to expand to a new market, and is taking it step by step. A registered office address (or virtual office) allows you to explore a new market, while limiting your expenses. It’s not about being ‘virtual’, but it’s about avoiding as much bureaucracy and legal expenses as you can, while your business is not yet at its full capacity. Our tools allow you to get an understanding of the legal framework of a country, so you are able to make the decisions for yourself, rather than having to rely on an accountant or lawyer.
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Can I really submit my corporate tax return myself, without any charges?"Yes, anybody can submit their corporate tax return themselves, without any help from an accountant. Our Dashboard provides you the detailed information, step by step, on how to login to your online Tax Portal, and to file your tax return. Obviously, the more complicated your company activities (and transactions) the more complex your tax return will look like. But if you have almost no operations, then you can save thousands of euros in accounting fees, without requiring any accounting skills! Once your company grows, we offer more detailed information, so you can learn along the way. Or you can decide to involve an accountant at that stage.
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