Financial difficulties - Netherlands
Stabilising a business
If you are in financial difficulty, you need to establish your company's viability. This should be done by an (independent) business expert and investigated by order of the Municipal Social Services. If the business is shown to be a going concern, external funding may be sought.
If you choose a legal form under which to do business as a private individual you can be held personally liable for business debts. These legal forms include entrepreneurs acting as sole traders, general partnerships (VOF) and limited partnerships (CV).
If your business is making a loss and you are no longer able to pay your debts, there is no need to panic - recognise the problems, seek sound advice from a consultant or confidential advisor, and take the following action:
- talk to your bank and accountant;
- inform creditors;
- contact the Tax Authority;
- if you have staff, contact the Employee Insurance Agency (UWV);
- if you have staff, request permission to terminate their employment, if necessary;
- draw up an inventory of your business (including creditors and creditors)
- try to terminate long-term contracts so that you can improve your liquidity position;
- do not sign any indebtedness certificates.
If you are unable to pay your debts via mediation, you may be eligible for a statutory discharging of debt, as regulated by the WSNP Act. In this case, an appointed trustee determines your revenue position and the proportion of this you can retain for your upkeep. Creditors' claims cease to apply if your application for a statutory discharging of debt is approved.
Access to different sources of finance can help overcome financial difficulties.
When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.
Deferral of payment
If an entrepreneur is unable to pay taxes on time, he or she can obtain a deferral from the Tax Authority. The relevant procedure depends on the business's legal form. The Tax Authority adds interest in the event of deferred payment.
An entrepreneur may only dismiss a member of staff when there are justifiable grounds for doing so. The entrepreneur requests an 'employment termination permit ' from his or her regional public employment service, UWV WERKbedrijf, and can also apply to the local-area judge to have the employment contract dissolved. Both possibilities apply solely to indefinite contracts. In the case of fixed-term contracts the entrepreneur must wait until the contractual period has ended.
The Dutch Chamber of Commerce's website provides information on coping with debt.
The Nibud agency provides practical information and help on debt prevention and assistance.
A business may qualify for credit on the basis of assistance for self-employed persons. This business capital is designed to maintain a business's viability, allowing it to carry out investments, re-finance short-term debts and discharge its debts.
Check also the legislation on this topic in: