Joint Ventures in Holland

Being one of Europe’s most developed states, Holland draws crowds of entrepreneurs interested in doing business here. One way of realizing their ambition lies in establishing a JV with a company in Holland. 

This article will be looking into the main aspects of JV regulation in Holland.

Kinds of JVs

As per Dutch legislation, a JV isn’t recognized as an individual legal concept; therefore, the term hasn’t got any specific legislative meaning.

2 or 3 entities may cooperate in different ways, of which the 2 most popular ones include:

• contracts 
• JVs

Those interested in opening a business in Holland should keep in mind that signing a contract is a most popular & straightforward way of cooperation. Quite a few companies rely on contracts because they:

• do not require the company to be registered in Holland
• only take signing an agreement on the establishment of a Dutch JV in which basic cooperation conditions are set forth.

If 2 entities make a decision to establish a JV in Holland, they can either register a partnership in Holland or legal entity.

Pros & Cons of Registering JVs in Holland

By registering a partnership, its founders get to enjoy a lot more transparency of taxation. That enables them to avoid taxation of the partnership’s profits & only pay taxes related to JV partners’ profits. There are cons, too. Because they have no legal personality, JVs cannot have assets of their own. It’s also worth noting that partners bear full liability for any debts their partnership may accrue.

The 2 main forms JVs may take include:

• a partnership
• a LLP

Should a JV that has a registration in Holland wish to become an legal entity, it can use these 2 options:

• a private LLC
• an open company (NV)

Foreign individuals seeking to conclude a JV contract with a partner from Holland should keep in mind that JVs are very popular in different industries. JVs enable their founders to reduce risks & share costs.

Requirements for Non-Domestic Participants

Holland currently has no regulations relating to the establishment of JVs with foreign partners. No limitations are placed on FDI in Holland either.

As per recently amended legislation, entities with a legal status (including partnerships) must be registered in the UBO registry.  

Financing JVs

To be able to know the manner in which their JV will be financed, JV founders need to pay a lot of attention to taxes. In Holland, JVs structured as legal entities are typically financed through monetary contributions, stakeholder credits & funding through 3rd parties. When concluding a JV agreement in Holland, its signatories need to include a clause on JV financing, which includes implications for a party(ies) that do not fulfill their financing obligations.

Holland hasn’t got any limitations on investing in JVs. As regards limitations on distribution, they are going to depend on the JV’s structure. 

Need more information on JVs in Holland? Contact IQ Decision UK and get professional legal advice on managing Dutch JVs.

Resolving JV-Related Disputes

As per local legislation, no limitations are placed on JV partners with regard to selecting a law regulating their JV contract. However, one needs to keep in mind that the charter of a legal entity can only be regulated by Dutch legislation. JV partners can select ways in which they will resolve disputes in Holland, too.

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