Foundation
The foundation is an artificial person set up by notarial deed or in a person's will. As a noncommercial organization, its capital is usually reserved for a specific purpose. The purpose of a foundation may not be to make payments to its founders, persons who form part of its bodies or others, unless the payments to the latter group have an idealistic or social purpose. Only the existence of a committee is legally required in order to set up a foundation.

For tax purposes it is important that a foundation, if it meets certain requirements, can be categorized as an institution serving the general public. Only then will acquisitions made by the foundation be exempt from gift or inheritance tax.

Cooperative
The cooperative is an association set up by notarial deed. The idea of a cooperative is to keep costs as low as possible for those working together in the cooperative. This is done by means of agreements concluded on behalf of the company that conducts the cooperative for its members.

From an organizational point of view, a cooperative is roughly the same as a normal association. However, the cooperative may allocate profits among its members. When the cooperative is wound up, the members and former members of a cooperative are in principle required to contribute to any shortfall. This obligation can be excluded or limited to a particular maximum under its constitution.

Association
The association is an artificial person with members that has been set up for a particular purpose. An important aspect of an association is that its purpose may not be to allocate profits among its members.

If an association has its constitution laid down in a notarial deed, it is an association with full legal authority (a 'formal association'). If this is not the case, it is an association with limited legal capacity (or an 'informal association'). Through the voluntary listing of the association with limited legal capacity in the Commercial Register, the joint and several liability of the officers is cancelled. In that case they are only liable after a creditor has first made a claim against the association itself. That is why it is extremely important for officers of an association with limited legal capacity to have the association listed in the Commercial Register.

In addition, it is important from a tax point of view, such as in the case of a sports association, to find out whether turnover tax needs to be charged in relation to the operation of the canteen.

Mutual insurance association
The mutual insurance association is an association set up by notarial deed, its purpose being to conclude insurance agreements with its members in the business it conducts.

In terms of its organizational setup, a mutual insurance association is roughly the same as an ordinary association. A major difference is that the mutual insurance association may allocate profits amongst its members. The idea of the mutual insurance company, however, is not so much to make a profit as to achieve as favourable a spread of risk as possible among its members. Just as with a cooperative, the members and former members of a mutual insurance company are obliged to contribute to any shortfall if it is wound up. Here too, this obligation can be excluded or limited to a maximum in its constitution.

CMS Derks Star Busmann advises you on what the most suitable Dutch legal entity would be in your situation. We can also draw up the notarial deed for you or amend the constitution. We will also take care of additional work in connection with this, such as filing the artificial person and its first officers in the Dutch Commercial Register. Our tax experts can advise you on all the tax aspects that may play a role in setting up these artificial persons.