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Change Sole Proprietorship into General Partnership

Change Sole Proprietorship into General Partnership

The sole proprietorship is the simplest form of starting a business in the Netherlands, however it is not the only one. The partnership is another simple business form which can be used by those who want to start a small business. The only difference between them is that the sole proprietorship implies a single person doing business, while the partnership required at least two persons. The partnership can be general (VOF) or limited (CV).

In case a sole trader is no longer satisfied with the chosen business form, he or she can change it into partnership. Our Dutch company formation advisors can offer more information on how to change a sole trader into a general partnership.

The sole proprietorship vs. the general partnership in the Netherlands

The main difference between a Dutch sole trader and a VOF is that the sole trader can only be set up by a person who must be natural person, while the general partnership can be created by at least two persons, who can be natural or legal. From a taxation point of view, the income tax will apply to both the sole proprietorship and the general partnership. However, when a company acts as a partner in the Dutch VOF, it will be levied the corporate tax.

The main reason for which a Dutch sole trader is usually changed into a VOF is the financial burden which will be split to all members of the partnership.

Our company registration agents in the Netherlands can help those interested in setting up sole proprietorships and general partnerships.

Requirements when changing a sole trader into a general partnership

Those who want to change a sole proprietorship into a Dutch VOF must first de-register from the Trade Register and then draft and sign the partnership agreement with the other party participating in the VOF.

The change in business form for a sole trader is pretty much the same as when switching to a limited liability company, because the general partnership must be registered with the Dutch Trade Registry. However, the former sole trader can keep his or her name as a trade name in the general partnership.

Foreign citizens who have started a small business under the form a sole trader can change it into a general partnership with the help of our company formation consultants in the Netherlands, so please feel free to contact us.