Dutch American Friendship Treaty: different forms of busness associations in the Netherlands

On the basis of the Dutch American Friendship Treaty, a US entrepreneur can relatively easily acquire an entrepreneur visa in the Netherlands, provided that the entrepreneur sets up a company in the Netherlands and invests at least 4500 euros. What are the most common forms of business associations in the Netherlands? How do they compare to the ones in America? In this article, we will provide a comparative analysis of these business associations.

Vennootschap onder firma (VOF)

Vennootschap onder firma (VOF) is similar to general partnership in the US. Like the partners of a general partnership in the United States, the vennoten (‘partners’) of a Dutch VOF are liable jointly and severally for all debts, obligations, and other liabilities of the partnership. If an American entrepreneur wants to become a new partner of an existing VOF, he/she needs to be extra cautious, as there is a major difference between the situations in the US and the ones in the Netherlands. In the US, in accordance with section 306(b) of the Uniform Partnership Act (1997), a person that becomes a partner is not personally liable for a debt, obligation, or other liability of a partnership incurred before the person became a partner. The leading case is Conklin Farm v. Leibowitz (N.J. 1995), which holds that obligations on a loan, whether for interest or principal, are incurred when the loan is made, not when each particular payment is due. In other words, in the United States, a new partner will not be personally liable for a loan incurred by a general partnership before the person became a partner. However, the situations in the Netherlands are different. In March 2015, the Netherlands Supreme Court ruled that a new partner is liable for all the debts incurred before the person became a partner, as the Dutch Supreme Court holds that the specific provisions of the Dutch laws are meant to protect the creditors of the partnership, when the partnership property is insufficient to pay off the debts (ECLI:NL:HR:2015:588).

Commanditaire vennootschap (CV)

Commanditaire vennootschap (CV) is similar to the limited partnership in the US. The ‘beherende vennoten’ are like the general partners, and the ‘commanditaire vennoten’ are like the limited partners. In the US, a limited partner can participate in the management of the limited partnership, if the partnership agreement allocates such managerial rights to a limited partner. Even when a limited partner does participate in the management and control of an American limited partnership, this limited partner does not become personally liable for an obligation of the limited partnership (See Section 303(a) of the Uniform Limited Partnership Act 2001). However, in the Netherlands, a commanditaire vennoot (‘limited partner’) should definitely not take such a risk. Under Dutch laws, there is a statutory ‘management prohibition’ with respect to commanditaire vennoten (‘limited partners’). If a limited partner does not abide by this management prohibition, he/she shall become personally liable for all the debts and obligations of the limited partnership. In a 1970 case, the Dutch Supreme Court holds that this personal liability applies to all the debts incurred before the limited partner breached the management prohibition (ECLI:NL:HR:1970:AC5021, NJ 1970/406).

Besloten vennootschap (BV)

The besloten vennootschap or BV is similar to corporation in the US. The promoters who take the initiative in developing and organizing a new BV are exposed to personal liability for their pre-formation actions in the Netherlands. In the United States, from the perspective of US agency law, as the promoters work for a non-existent principal, the promoters shall be personally liable for the contracts that they sign on be behalf of the non-existent corporation. In the Netherlands, during the pre-incorporation phase, the promoters can use the future name of the BV added with the abbreviation i.o. ('in oprichting') to sign, for example, lease agreement and employment agreement. Like in the US, these promoters of a future Dutch B.V. shall be personally and severally liable for these contracts. To cure this issue, after the BV gets incorporated, the BV can enpower ('bekrachtigen') these contracts. In a 2017 case, the Dutch Supreme Court holds that enpowering means addressing a declaration of enpowering to the other party and that the other party receives the declaration, which is evidently less difficult than the three party novation requirement in the US (where all the three parties have to agree that the corporation is substituted for the promoter as the obligor on the contract).


With respect to taxation, the profits of a VOF and the profits of a CV will pass through to its partners to be reported on their personal income tax returns, and the maximum percentage of taxation is 49.5%. A BV's profits will be taxed at 15% (if the profits are equivalent to or lower than 245000 euros). If the profits of a BV are higher than 245000 euros, the current tax rate is 25%.

If you are a U.S. entrepreneur and you are interested in immigrating to the Netherlands under the Dutch American Friendship Treaty, please feel free to contact us through filling out the contact form.