THE MANAGEMENT AGREEMENT WITH A DUTCH TRADING PARTNER
Practice shows that the conclusion of a management agreement is very popular in the Netherlands. The decision to carry out work on the basis of a management agreement aims to promote both independence and flexibility. In addition, management agreements are favourable from a tax perspective. In the following, our Dutch corporate lawyer will inform you about the most important features of a management agreement and explain what you should look out for when entering into a management agreement.
WHAT IS A MANAGEMENT AGREEMENT IN THE NETHERLANDS?
A management agreement in the Netherlands is an agreement in which a company – also referred to as an operating company – and a managing director, principal shareholder or manager stipulate. However, practice shows that the managing director, the main shareholder or the manager make use of a management BV. In this construction, the managing director, principal shareholder or manager is hired through the management BV to perform work for the operating company. The respective tasks should be included in detail in the contract. The management is then independently assigned to carry out the tasks specified in the contract.
The management agreement is not explicitly regulated in the Dutch Code. It is generally assumed that the management agreement in the Netherlands is a service contract. The articles of law on the service contract are largely not mandatory law, and are therefore severable. There is therefore a great deal of freedom in the drafting of the contractual provisions, which makes the drafting and design of a management agreement very flexible. The drafting of a management agreement in the Netherlands is therefore tailor-made. It is all the more important that you seek the assistance of a lawyer when concluding a management agreement. The lawyers at MAAK Advocaten specialise in contract law, among other things, and can provide you with the best possible support in drafting your management agreement.
IMPORTANT CLAUSES IN A MANAGEMENT AGREEMENT
It is important to note that a management contract is not an employment contract from a legal point of view. If this is nevertheless the case, Dutch labour law applies to the management contract. This means, among other things, that the legal rules on termination, holiday and sickness protection apply to the management contract. Furthermore, the qualification of a management contract as a disguised employment contract is subject to tax consequences. It is therefore important to clearly separate the management contract from the employment contract.
In order to be able to conclude that the management contract is not an employment contract but a service contract, it is important to know whether there is a relationship of authority between the parties.
In practice, however, this leads to many discussions. What is important is the intention of the parties when concluding the management agreement and how it will be implemented. Relevant aspects are, for example, whether the contractor uses its own material, whether the contractor continues to be paid during illness and holidays, whether the contractor bears an entrepreneurial risk, and whether the contractor carries out work for several clients.
SPECIALIST COMPANY LAWYERS IN THE NETHERLANDS
A management agreement can be beneficial for your company in several ways. When drafting the management agreement, it is important that there can be no doubt that it is a management agreement. As the drafting of a management agreement requires individual customisation, we always advise you to consult a lawyer. MAAK Advocaten has experienced lawyers in both company law and contract and liability law. These lawyers are specialists who can assist you in drafting a management contract or analyse contracts that have already been concluded.
DUTCH LAWYER SPECIALISED IN MANAGEMENT AGREEMENTS
Do you have questions about Dutch company law or do you need specific legal advice on a management agreement in Holland? Our experienced English-speaking specialist lawyers in Holland will be happy to help you with the cooperation agreement.
MAAK Advocaten – Dutch, English-speaking specialist lawyers in Amsterdam Phone: +31 (0)20 – 210 31 38