Cooperative

A cooperative is a special kind of association. Unlike an ordinary association, a cooperative may distribute profits to its members. A cooperative can therefore be used in many cases where an NV or BV would otherwise have been used.

The main idea behind a cooperative is that it meets the material needs of its members. It should enter into agreements with its members, which those members conclude in the context of the business carried out by the cooperative.

In cooperatives, there is a lot of freedom in the articles of association to make any desired link between member commitment, control and profit rights. It is therefore a good vehicle for shaping complex collaborations between parties with a similar goal.

Cooperatives are common in the agricultural sector. A good example is FrieslandCampina, the world's largest dairy cooperative. But cooperating self-employed workers also often form a cooperative. A franchise organisation can also be set up nicely as a cooperative.

Members' liability

Unlike an association, the members of a cooperative are in principle liable for any deficit when the cooperative is dissolved. However, the articles of association of the cooperative can deviate from this. Depending on the degree of liability of the members, the cooperative should place the letters U.A. (exclusion of liability), B.A. (limitation of liability) or W.A. (legal liability) at the end of its name.

Taxes

The cooperative runs a business and has to pay corporate tax on the profits it makes. Members-natural persons holding an interest of 5% or more-must pay tax in Box 2 for any profits on disposal or distributions. Other individuals are taxed in Box 3. For members liable to corporate tax, profits may be covered by the participation exemption.

For more information on setting up a cooperative or amending articles of association, please contact us. We will be happy to advise you.