Limited partnership (CV)

The limited partnership (CV) is a special form of the general partnership (vof). Unlike the vof, the limited partnership has two types of partners: managing partners and limited partners. The managing partners have the day-to-day management of the limited partnership and are jointly and severally liable for the debts of the limited partnership. The limited partners are the company's lenders. They are not liable for the debts of the limited partnership beyond the amount of their contribution. However, they must meet certain conditions. For example, a limited partner may not outwardly behave as a general partner. Also, in principle, the limited partner's own name may not appear in the name of the limited partnership.

When do you opt for the limited partnership?

The limited partnership is chosen in situations where the company's financiers want to benefit from the profits made within the company. It is also used in situations where the financiers cannot be paid interest on the invested amount because the costs are too high. The limited partnership contract may contain further agreements on the distribution of profits.

Agreement

Although there are no formalities for setting up a limited partnership, it is advisable to have a good contract drawn up that sets out the agreements between the partners. Here, it is important to pay attention to, for example, the powers and e.g. the efforts to be made by the managing partners in particular, what happens if a partner leaves, etcetera.

Taxes

Whether a limited partnership is fiscally transparent depends on whether it is an open limited partnership or a closed limited partnership. A limited partnership is open if anyone can join without the consent of the other partners. With a closed limited partnership, the other partners have to give their permission before a new partner can join.
Fiscally transparent means that for income or corporate tax purposes, it is not the limited partnership that is taxable, but the partner for his share in the limited partnership's assets.
For payroll tax, sales tax and transfer tax, the limited partnership itself is taxable.

End of limited partnership

If one of the partners dies or resigns, the limited partnership ends. In a limited partnership contract, arrangements can be made so that the limited partnership can be continued after the death or resignation of a partner. It can also regulate when a partner must resign and the financial consequences of resigning.

Although a civil-law notary is not required for the incorporation of a limited partnership, we have so much specialist knowledge in this area that it is useful to make use of it. That way, you avoid expensive legal proceedings.

For more information on (starting) a limited partnership, please contact us. We will be happy to advise you.