Setting up an association: Everything you need to know

What is an association and how do you set one up?

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An association is a non-profit organization that focuses on a common goal or passion, such as sports, music, or community engagement. In the Netherlands, an association must have at least two members, who have a say in the Board and day-to-day business through the General Meeting of Members (GMA).

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Types of associations

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There are two main types of associations: associations with full legal capacity and associations with limited legal capacity. Both types have different legal and practical implications.

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1. Association with full legal capacity

An association with full legal capacity has the same rights and obligations as a natural person. This means that the association can, for example, take out loans, buy real estate and receive inheritances. This type of association is often required to receive grants. The incorporation requires a notarial deed, which sets out the statutes. After that, the association must be registered in the Trade Register of the Chamber of Commerce (KvK).

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2. Association with limited legal capacity

An association with limited legal capacity, also known as an informal association, is not established by notarial deed and has more limited legal options. Directors of these associations are personally liable for any debts. This type of association is easier to set up, but involves more risks for directors.

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The difference between an association and a foundation

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A common misconception is that associations and foundations have the same legal status, but there are important differences:

• Members: An association has members who have a say, while a foundation is not allowed to have members.
• Statutes: The statutes of an association are regulated differently than those of a foundation.
• Objectives: Although both legal entities are non-profit, foundations often have a more charitable purpose and cannot hold a General Meeting of Members.

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Setting up an association

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If you want to set up an association with full legal capacity, you must do this through a notary. The notary draws up a notarial did establish the association's statutes. After that, the association is registered in the Commercial Register of the Chamber of Commerce. As long as registration is not completed, directors are jointly and severally liable with their private assets.

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UBO register

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Since September 2020, it has been mandatory for associations with a company to register their ultimate stakeholders in the UBO (Ultimate Beneficial Owners) register. This register is intended to prevent money laundering and terrorist financing. People who have more than 25% control in an association must be registered.

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Costs of setting up an association

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Setting up an association involves some costs. The costs for the notary vary, but a basic incorporation can cost around €450, excluding disbursements such as VAT and registration fees with the Chamber of Commerce (€80.10). In addition, the association must pay annual administrative costs, especially if the turnover is above a certain threshold, which may lead to the obligation to file financial statements.

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Membership in an association

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An association differs from a foundation by having members. The membership procedure is usually set out in the statutes. Members influence the course of events within the association through the General Assembly of Members. During these meetings, board members are appointed, the annual balance sheet is approved, and decisions are made about possible changes in the statutes or dissolution of the association.

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Tax obligations for associations

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Not all associations are subject to tax. Associations that do not carry out commercial activities are exempt from tax. However, if an association carries out commercial activities, corporate tax is due. Associations with an ANBI (Public Benefit Institution) or SBBI (Social Interest Institution) status have certain tax benefits.

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Set up your association

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Setting up an association is an important step that must be done accurately and legally correctly. Contact a notary to ensure that the incorporation runs smoothly. You will receive a draft certificate of incorporation and your association will be officially registered within a few working days.

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Frequently Asked Questions (FAQ)

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1. What is an association?

‍An association is a non-profit organization run by its members, with the purpose of promoting a common interest or passion.

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2. What is the difference between an association and a foundation?

‍An association has members with participation through the General Assembly of Members, while a foundation has no members and is more charitable.

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3. What are the costs of setting up an association?‍

The costs for incorporation vary, but can be around €450 for the notary, plus the registration costs with the Chamber of Commerce.

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4. What is the UBO register?‍

The UBO register registers the ultimate stakeholders of associations with a company, to ensure transparency and prevent money laundering.

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Conclusion

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Establishing an association offers a structured way to pursue a common goal or passion, whether it concerns sports, culture, or social interests. It's important to understand what type of association best suits your needs, whether it's an association with full or limited legal capacity. In addition, setting up an association involves some legal obligations and costs, such as registration with the Chamber of Commerce and possible tax returns. By being well informed about the various aspects, such as membership, tax benefits and the UBO register, you ensure that your association operates on a solid basis.