Limited partnership (cv or commanditaire vennootschap)

A limited partnership (LP) is a business formed by at least 2 individuals, where everyone involved is a partner. There are two types of partners in an LP:

  1. General partners: As a general partner, you have the day-to-day management responsibilities in the business. 
  2. Limited partners, also known as silent partners: The limited partner is only financially involved by providing capital. Unlike shareholders in a corporation, the limited partner does not actively engage in the buisness.
An LP can be seen as a special form of a general partnership (GP). Like a GP, an LP is not a legal entity. Therefore, general partners are personally liable with their own assets for any debts of the business.


If you want to start an LP, you need to register it with the Chamber of Commerce (KVK). The registration fee is €80.10. All basic information about the LP is recorded, such as its name, activities, and the names and addresses of the general partners. Only the number of limited partners and their contributions need to be mentioned, without providing personal details to the Chamber of Commerce. You can prepare your registration online.

When setting up an LP, you also register the ultimate beneficial owners (UBOs) with the Chamber of Commerce. Ultimate beneficial owners are individuals who hold more than 25% ownership interest, for example.

Changing legal form

You can convert an LP into another legal form, such as a general partnership (GP) or sole proprietorship. You need to inform the Chamber of Commerce and the Tax Authorities about the new legal form of your business. You may need to calculate cessation gains for the Tax Authorities. Check on the tax authorities' website if this applies to you.

You can also merge the LP into a private limited company (BV). One of the differences is that the BV becomes responsible for the business, including its finances and any debts. There are various ways to convert an LP into a BV, following similar steps to converting a sole proprietorship into a BV.


An Limited Partnership agreement is not mandatory but advisable. In an LP agreement, you document agreements regarding the collaboration, such as:
  • Identification of the partners and their contributions, such as capital or labor.
  • Contribution of assets or profit contribution
  • Taking out a life insurance policy for business continuation in case of a partner's death.
  • Agreements about the client portfolio if partners seperate.
All general partners are authorized to act on behalf of the LP. For the consequences of these actions, such as entering contracts, all partners can be held liable. Deviating agreements regarding liability are recorded in an LP agreement.

You can draft an LP agreement yourself or have it done through a lawyer or notary. Costs for drafting a partnership agreement via a notary or lawyer vary, averaging between €200 and €400. The purpose of the LP and the powers of the partners are recorded by the Chamber of Commerce in the Commercial Register.


The LP is not a legal entity. This means that general partners are responsible for all actions of the LP and are personally liable for its finances and any debts. Even if the debts were incurred by another general partner, each general partner is personally liable for the entire debt of the LP.

Creditors can choose whether to claim against the assets of the business or the partners. If these assets are insufficient to repay the debts, creditors have the right to the personal assets of the partners. If you are married in community of property, your partner is also financially liable for the debts. This can be avoided with prenuptial or partnership agreements.

A limited partner is not involved in the management of the business and cannot carry out legal acts on behalf of the company. Therefore, the limited partner is not personally liable. However, the limited partner may lose the contributed capital. If a limited partner becomes publicly associated with the business, they may become personally liable.

Later entry

A general partner who joins the LP later is automatically liable for debts incurred before their entry. If you don't establish an LP yourself but join an existing LP, first check the financial situation by reading all documents.

General partners who join later can also make agreements about the division of existing debts of the LP. If a claim arises, the other partners reimburse the difference to the new partner.

If a general partner leaves, they remain jointly liable for the debts incurred during their tenure. Again, partners can make agreements among themselves regarding the division and reimbursement of debts.


You are legally required to keep records. You can outsource this to an accountant. Prices range from €500 to €1,000 per year.

Paying taxes

Each general partner pays income tax on their share of the remuneration or profits. If the Dutch Tax Office considers you an entrepreneur for income tax purposes, you are entitled to the small and medium-sized enterprises (SME) profit exemption (mkb-vrijstelling). If you also meet the minimum hours criterion, you are entitled to additional tax benefits, such as self-employed tax relief and fiscal retirement reserves. Starters are also entitled to starter's tax relief for the first 3 years. Learn more about tax benefits and deductions.

The income of the limited partner is taxed as "business income". The limited partner is also eligible for tax benefits for investments, such as arbitrary depreciation and investment deductions. However, the limited partner is not entitled to other tax benefits for entrepreneurs.

For VAT purposes, the LP is the entrepreneur and must pay VAT.

Signing authority

Every general partner has signing authority, meaning they can sign contracts or perform certain legal acts on behalf of the LP, such as updating information in the Commercial Register. If you want limitations on what a partner can sign on behalf of the LP, for example, for high amounts, you can make agreements in the partnership agreement. These agreements are also recorded in the Commercial Register.

The LP can also grant someone else power of attorney. This is a declaration stating that this person can act on behalf of the company. Register this person, the authorized representative, with the Chamber of Commerce. This is not mandatory but useful, so your business partners know who is authorized to act on behalf of the company.


With an LP, you can hire employees. You must pay payroll taxes and social security contributions for employees. If you hire an employee for the first time, you must register as an employer with the Tax Authorities and inform the Chamber of Commerce.

Social security

As a general partner, you pay contributions for social security. You will receive old-age pension (AOW) from the day you reach retirement age. AOW provides a basic income; you can arrange additional pension yourself.

You are not entitled to sickness benefits, unemployment benefits, or disability benefits. Therefore, it's advisable to take out disability insurance. If you are pregnant, you are entitled to a minimum 16-week maternity allowance. Apply for this at the Employee Insurance Agency (UWV). Depending on your business, it may be wise to take out other supplementary insurances.

Closing down

If a general partner leaves or dies, the LP is dissolved and ends. If you want the LP to continue after the departure of a partner, you can arrange this in the partnership agreement with a so-called continuity clause or buy-sell agreement. This means that the remaining partners take over the contribution of the departing or deceased partner. The LP can then continue with a new partner or as a sole proprietorship. In the agreement, you determine who is entitled to what and how you divide the business.

If you want to change a limited partner, you need to adjust your agreement among yourselves. If the number of general partners changes or the contribution of the limited partners changes, inform the Chamber of Commerce. For limited partners, only indicate their number and contributions without providing personal details to the Chamber of Commerce.

If the LP is completely dissolved, the business must be liquidated. All partners must agree to this. After agreement, partners distribute and settle affairs. This means paying off debts and possibly receiving their share back in kind or money. You can determine how this is done in the partnership agreement. For example, you can agree to distribute the remaining assets based on each partner's profit share. Or if there are remaining debts, partners pay these from their personal assets.