Terminate a BV in the Netherlands - new rules in 2023
Oct 16, 2023
The Turbo-liquidation: it sounds like something out of a chemistry class. But in fact, it has been the tried and tested way for Dutch entrepreneurs to get rid of an empty or disused BV for almost 30 years. But that’s all going to change. The Dutch Ministry of Justice announced a change in the rules regarding turbo liquidation, shortly before the outbreak of the corona crisis. Those events have put this particular subject lower on the list of priorities. It will most definitely pop up back onto the agenda in 2023.
Remind me again, how does a turbo liquidation work?
Normally an empty BV would go into bankruptcy for not being able to pay its dues. In such a case, a “Curator” is appointed by the Dutch court. He (or she) will try to recoup as much funds for the company’s creditors as possible. In the process, the Curator will check whether the BV has done everything “by the book” in the past. If that’s not the case, the curator can go after directors in person and seek redress. That is a pleasant safeguard for the BV’s creditorsBut a lot of BV’s don’t have any monetizable assets at the end of their lives. In the past that meant that a Curator would be appointed to liquidate a company, with no prospect of even paying his own salary (yes that’s paid from the BV) let alone paying off creditors. A big waste of everybody’s time and money. That’s why Dutch lawmakers implemented the turbo liquidation. A turbo liquidation is a legally correct way of terminating a Dutch BV through a resolution by the BV’s meeting of shareholders. The board of directors then notifies the Dutch Chamber of Commerce of the dissolution, so they can deregister the BV. Upon deregistration, the Chamber of Commerce will also notify the Tax Authorities. No external parties are involved here. This means a BV with one founder can single handedly dissolve a BV and deregister it from the Chamber of Commerce.
And what was wrong with that?
The problem here is that sometimes debts were left unpaid unlawfully. In principle, there is nothing wrong with leaving creditors of a BV unpaid before going into turbo liquidation. The managing directors of the BV just need to make sure they have done everything they can to repay the creditors, and not (for example) draw away funds to the bank account of a friend. Sadly this did happen a bit too often according to Dutch lawmakers, leaving creditors empty-handed.The problem is not so much that the turbo-liquidation encourages swindling and fraud: a creditor can always go after the company’s directors, for example by reopening the dissolution. The Minister just sees the current process of turbo liquidation as a missed opportunity to provide extra safeguards for the termination and to give creditors more tools in the pursuit of possible claims. Creditors will still have to do the actual pursuit themselves. To help them, the termination of a BV will get a few extra rules.
What will the new rules look like?
From the beginning of 2023 (expected), the following rules will apply to turbo liquidation in the Netherlands.
The board is obliged to draw up and file a closing balance sheet. The closing balance relates to the financial year of the turbo liquidation and must be filed with the trade register.
The closing balance sheet must include a management statement as to why there are no funds left to pay creditors.
If a distribution of liquid assets has taken place at the moment of liquidation, a final distribution list must be provided.
It is up to the board to ensure a general announcement of the dissolution, probably in a nation wide newspaper. The announcement should state that the final balance sheet of the BV with the annual accounts are available for inspection at the Chamber of Commerce.
The annual accounts for all previous financial years must be published at the Chamber of Commerce.
This should not be an insurmountable hurdle to any serious entrepreneur. However, there will be extra time, money and effort involved.
It is not yet clear exactly when the new rules will take effect, but this will most definitely take place somewhere in 2023. If you want to get rid of your BV in the old trusted way, then you would do well to do this quickly before the additional rules come into effect.
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