Dutch Limited Partnership
Commanditaire Vennootschaap (CV)

General Overview

Within the Dutch business structures, Commanditaire Vennootschaap (CV), known as the Dutch Limited Partnership, is a distinctive and flexible option. Unlike some tax havens, the Netherlands is recognized for its stringent regulations and is considered an open, top-tier jurisdiction, fostering international business and carrying a rich legacy of expertise in trade and financial services.

The Netherlands is not typically categorized as a tax haven or a low-tax jurisdiction; it is known for its well-regulated environment. It is regarded as an open and reputable jurisdiction with a long-standing history in trade and financial services.

As a highly developed EU member state, the Netherlands maintains a standard level of taxation. The corporate tax rate in the Netherlands stands at 25%. Nevertheless, Dutch law offers an avenue for registering and operating Dutch entities with a zero-tax rate through a legal structure called a Commanditaire Vennootschaap (CV). This structure shares similarities with limited partnerships in other jurisdictions.

A Dutch CV is essentially a limited partnership with a minimum of two partners. One partner holds the position of General Partner, while other partners are designated as Limited Partners.

By default, Dutch legislation designates the General Partner as the entity responsible for the day-to-day operations of a CV company. However, there are no restrictions preventing the appointment of additional individuals to serve as directors or managers of a CV company. Nonetheless, the General Partner bears primary responsibility for the commercial activities and financial obligations of the CV company.

CV administration

The majority of C.V.s – Limited Partnerships in the Netherlands, employed in international planning for families and entities from countries that impose restrictions and penalties on the use of jurisdictions with no or low taxes are primarily utilized for holding passive investments, such as bank or brokerage accounts.

This is typically accomplished through the following steps:

Essential C.V. Requirements

A Commanditaire Vennootschaap (C.V.) must comprise a minimum of two partners, which include a general partner and one or more limited partners. The terms of their partnership are established through a Limited Partnership Agreement, specifying their respective ownership percentages.

This partnership agreement typically contains provisions governing the admission of new limited partners and the removal of existing partners.

The general partner holds the responsibility for representing the C.V. in its business operations, while limited partners are not actively involved in the day-to-day activities of the C.V.

The ownership stake of the general partner can vary, depending on the terms agreed upon by the parties involved. Some C.V.s are structured in a way that the general partner owns a small fraction of the C.V.’s assets, such as 0.001%, with the remaining 99.999% held by the limited partner.

As long as the C.V. is classified as non-resident, it is exempt from the obligation to maintain financial records, file accounting statements, or submit tax returns in the Netherlands. However, registration of the C.V. with the relevant Chamber of Commerce is a mandatory requirement.

between the parties. Some C.V.’s are structured with the general partner owning a fraction of the C.V.’s assets (for example 0,001%) and the limited partner holding the remaining 99,999%.

Provided the C.V. is deemed to be non-resident it does not need to maintain books or file accounts or tax returns in the Netherlands. Registration of the C.V. in the relevant Chamber of Commerce is required.

Key Information about Dutch Limited Partnership (Commanditaire Vennootschaap, CV)

Benefits of Dutch Limited Partnership (CV)

Legal Aspects

A CV is fundamentally a contractual arrangement between one or more general partners and one or more limited partners. Although a CV agreement can be informally concluded, it is common practice to establish a CV via a written agreement (contract), often executed as a notarial deed by a Dutch civil-law notary.

The establishment of a CV is straightforward and can be accomplished in a matter of days. Dutch law does not impose specific requirements regarding the content of the CV agreement, allowing for a high degree of contractual freedom. Moreover, there are no restrictions on the identity of the partners, enabling residents and non-residents, as well as individuals and corporate entities, to participate in a CV.

The management of a CV is primarily the responsibility of the general partner(s). It is essential to note that general partners can be held liable for the CV’s debts. In contrast, limited partners typically provide the financial backing for the CV.

Limited partners are not involved in the active management of the CV under any circumstances. Deviating from this principle results in the limited partner assuming liability for the CV’s debts and obligations. Partners possess the freedom to determine their respective shares of the CV’s profits, with varying profit allocations allowed. For instance, a distribution of profits such as 0.001% for the general partner and 99.999% for the limited partner is permissible.

In international structures, it is common for a CV to have only one general partner, often represented by a designated corporate entity. This entity is usually a Dutch foundation, provided and managed by a Dutch fiduciary service provider. This arrangement is designed to mitigate liability risks, primarily due to two key reasons:

Tax Aspects of Dutch Limited Partnerships (CV)

For Dutch tax purposes, a Dutch Limited Partnership (CV) can be categorized as either “closed” (tax transparent) or “open” (tax non-transparent). Under Dutch tax legislation, a CV is considered “closed” if the admission and substitution of limited partners require unanimous consent from all other partners. Therefore, the partners have the flexibility to determine whether the CV should be tax transparent or non-transparent by incorporating appropriate provisions in the CV agreement. Any CV that does not meet the criteria for a “closed” CV is considered “open.” Notably, the tax treatment of an “open” CV closely resembles that of a Dutch company, rendering it subject to Dutch corporate income tax.

CV as a Portfolio Investment Holding Company

In this setup, a “closed” CV serves as a vehicle for holding portfolio investments. Typically, the limited partner holds a 99.999% interest in the CV, while the general partner holds a 0.001% interest. Both the limited and general partners are based outside the Netherlands. Although the CV is tax transparent for Dutch tax purposes, it is considered tax non-transparent in the home country of the limited partner. Consequently, the limited partner is usually not obligated to report income unless they receive profit distributions from the CV. This arrangement allows for a significant tax deferral, enabling the reinvestment of profits over an extended period. Moreover, distributed profits may qualify as tax-exempt income under the participation exemption regime for the corporate limited partner.

CV as a Trading Entity

In this scenario, the CV engages in international trade. The CV, acting as an agent, receives instructions from a company (Principal) located in a low-tax jurisdiction to conduct specified trading activities on the Principal’s behalf. While the Principal can be a partner in the CV, it is not a requirement. Profits realized by the CV from these trading transactions are not subject to Dutch taxation due to the tax-transparent nature of the CV.

Income Taxation

Various partnership forms exist in the Netherlands, with the most common being:

• The private unlimited partnership (“Maatschap”)
• The collective unlimited partnership (“Vennootschap onder Firma” or “VOF”)
• The limited partnership (“Commanditaire Vennootschap” or “CV”)

Partnerships like the VOF and Maatschap are regarded as tax-transparent entities for Dutch income tax purposes. Each partner is taxed individually for their share of the partnership’s income. Partners are required to report this income in their annual tax returns as income from entrepreneurship in Box 1.

A CV comprises partners with limited liability (the Limited Partners) and partners with unlimited liability (the General Partners). The tax treatment of Limited Partners is contingent on the CV’s tax status.

Open and Closed Limited Partnerships (CV) in a Dutch Limited Partnership

About Dutch Limited Partnership with TBA Associates

Established in 2009, TBA Associates operates a dedicated business development team with expertise in creating tailored solutions for wealth preservation and growth. The team specializes in providing tax-efficient structures to facilitate cross-border transactions. TBA Associates’ experts guide and support clients in making informed decisions and implement strategies to manage their financial affairs confidentially and in a tax-friendly environment, free from adverse tax laws.