ECOVIS Guatemala

How to close a company in the Netherlands: ‘Turbo’ liquidation of a Dutch legal entity

In the Dutch legal system, there are two ways to dissolve a legal entity: formal dissolution proceedings and “turbo liquidation.” A law amending the legal provisions on turbo liquidation came into force on 15 November 2023. International companies in particular are struggling with these new regulations. The Ecovis experts explain the details.

While the formal dissolution procedure is subject to several legal requirements, such as a two-month objection period and publication in a national newspaper, turbo liquidation comes into effect when a legal entity has no assets at the time of the dissolution resolution (by the shareholders). In this case, the legal entity automatically ceases to exist once this resolution takes effect.

What the new law on turbo liquidation means

There have been concerns about the misuse of turbo liquidation, especially when a legal entity with debts applies for the procedure. Since the entity is automatically dissolved when it has no assets, it does not need to account to creditors. If a creditor wishes to claim from the entity, it may no longer exist. The bill aims to increase transparency, improve the position of creditors, and combat misuse of the procedure. This should ultimately enhance trust in the use of turbo liquidation.

The bill introduces a requirement for management boards to disclose certain financial information when opting for turbo liquidation. In the event of non-compliance, management board members can be banned from acting as directors in the future. Additionally, it increases the ability of creditors to access information.

Do you need to dissolve a company in the Netherlands? We can help you ensure the process is legally compliant.

Allard Schuering, civil-law notary and partner KienhuisLegal – Member of ECOVIS International, Utrecht, Netherlands

How it works

In addition to the (shareholders) resolution to dissolve a legal entity without assets, the legal entity will be required to file certain documents with the trade register of the Dutch Chamber of Commerce. These documents include financial statements for the final year in which the entity is dissolved and the previous year if no financial statements have been made public, an explanation of the reason for the lack of assets and the existence of debts and, if applicable, how the assets were liquidated before the dissolution.

The board is also obliged to inform creditors in writing. Failure to comply will be punishable under the Economic Offenses Act. The penalty may include removal from the trade register and a ban for the managing director meaning that he/she cannot act as a managing director of any Dutch legal entity for the next five years. In the case of dissolution without assets, the managing director ban included in the Bankruptcy Act also applies. The Public Prosecution Service can also request a managing director ban.

Conclusion

The new law aims to improve the position of creditors and enhance the image of the turbo liquidation process. In practice, it means that there are more requirements that must be met before a company can be dissolved, even in a simplified manner.

For further information please contact:

Allard Schuering, civil-law notary and partner KienhuisLegal – Member of ECOVIS International, Utrecht, Netherlands
Email: Allard.Schuering@KienhuisLegal.nl

New Regulations on Tax Management For Enterprises with Related-Party Transactions

On 10 February 2025, the Vietnamese government introduced changes to the tax rules for companies with related-party transactions, aimed at simplifying key areas. The changes include clearer rules on bank loans, updated definitions of related parties and adjustments to non-deductible interest expenses. The experts from ECOVIS AFA Vietnam explain these updates in detail.

After the period of publication of the Draft Decree amending the Government Decree No. 132/2020/ND-CP (Decree 132) regulating the tax management of enterprises with related party transactions dated 5 November 2020 to gather opinions from ministries, government departments and the business community, the Government officially issued Decree No. 20/2025/ND-CP (Decree 20) amending and supplementing Decree 132 on 10 February 2025. The main amendments and additions to Decree 20 are summarised below:

1. Decree 20 supplements the case of exclusion of companies that guarantee or lend to other companies as stipulated in Point d, Paragraph 2, Article 5 of Decree 132. Accordingly, the lenders, the guarantors being the credit institutions, are not considered as related parties if they do not participate in the activities of “operation, control, capital contribution, investment” in the borrowing enterprise or the guaranteed enterprise.=> This is the most notable content of this revised decree. Previously, Decree 132 created obstacles for many companies when they borrowed capital from banks for production and business activities, inadvertently falling into the case of determining the affiliation relationship and having to bear the control level of deductible interest expenses, while the enterprise and the bank are completely independent, without control, management, operation, capital contribution or investment in the production and business activities of the enterprise.
2. Decree 20 clarifies the responsibility for declaration and payment of taxes for independent accounting branches with related parties (previously not clearly regulated).
3. Decree 20 supplements cases of related parties to synchronise with changes in the law on credit institutions: Credit institutions and subsidiaries or controlling companies or associated companies of credit institutions as prescribed in the Law on Credit Institutions and amended, supplemented or replaced documents (if any);
4. In addition, the Decree clarifies the provisions on transferring non-deductible interest expenses of previous tax periods when the enterprise only has a related relationship through borrowing capital from a credit institution according to Point d, Clause 2, Article 5, Decree 132.
   If an enterprise does not have a related party relationship and does not enter into related party transactions as provided for in Decree 132 and Decree 20, the non-deductible interest expense that has not been carried over to the following tax periods by the end of the 2023 tax period must be carried over evenly to the following consecutive tax periods for no more than five years from the year following the year in which the non-deductible interest expense is incurred.If an enterprise has related relationships and related transactions in tax period 2024, non-deductible interest expenses of previous tax periods cannot be carried forward to the next five years.
5. Decree 20 also extends the responsibility of the State Bank of Vietnam in providing information of the related individuals and related enterprises of credit institutions upon request from the Tax Authority.
6. At the same time, Decree 20 amends Appendix I – Information of related party relationships and related-party transactions to align with the amended, supplemented regulations mentioned above.

Decree 20 was officially issued on February 10, 2025 and will apply from the 2024 tax year.

The above content has been researched and summarised by ECOVIS AFA VIETNAM from widely published legal documents and articles. If you would like to discuss more in-depth issues, please contact us using the information below:

Nghia Tran, Partner, ECOVIS AFA VIETNAM, Da Nang City, Vietnam
Email: Nghia.Tran@ecovis.com.vn

Audit Exemption Malaysia: New Qualifying Criteria

The Companies Commission of Malaysia (SSM) has introduced an audit exemption to reduce costs for small companies, with new rules on turnover, assets, and employees phased in over three years. Certain companies, such as public company subsidiaries, remain ineligible. While the exemption offers benefits, companies should assess its impact on governance and transparency, as explained by the Ecovis experts from ECOVIS Malaysia.

The Companies Commission of Malaysia (SSM) introduced the audit exemption under the Companies Act 2016, which came into effect on 31 January 2017. However, the specific guidelines on audit exemption were issued later through Practice Directive 3/2017, which was published on 4 August 2017 and became effective for financial periods ending on or after 31 December 2017.

What are the Objectives?

• To reduce the financial burden faced by micro and small companies, as well as the cost of preparing audited accounts.
• To align with the Government’s policy to help Malaysian companies reduce the overall cost of doing business.
• To encourage business growth by reducing the regulatory burden, allowing small businesses to focus on business development and expansion rather than compliance costs.
• To optimise regulatory resources by exempting small companies from audits, allowing regulators to focus on larger companies and high-risk entities that require closer financial supervision.
• To aligning with global best practices. Many countries have introduced audit exemptions for small companies. Malaysia follows similar international standards to remain competitive and business-friendly.

What are the Current Criteria?

• Dormant companies: Companies must have either been dormant since the time of incorporation, or dormant during the immediate past and current financial year.
• Threshold Qualified Companies: Companies must fulfil the following requirements for the current Statement of Financial Position as well as in the immediate past two financial years:
  • Annual revenue not exceeding RM100,000
  • Total assets of RM300,000 or less
  • Has not more than five (5) employees
• Zero Revenue Companies: Companies must fulfil the following requirements for the current Statement of Financial Position as well as in the immediate past two financial years:
  • Revenue = NIL
  • Assets = do not exceed RM300,000

NEW Qualifying Criteria

A private company qualifies for audit exemption if it meets any two (2) of the following criteria:

• The annual income of the company for the current financial year and the immediately preceding two (2) financial years does not exceed RM3,000,000.
• The total assets of the company in the current statement of financial position and in the immediately preceding two (2) financial years does not exceed RM3,000,000.
• The number of employees as at the end of the current financial year and in the immediately preceding two (2) financial years does not exceed thirty (30).

Implementation Stages

1. The audit exemption threshold criteria will be phased in over a three (3) year period.
2. The thresholds for revenue, assets and number of employees will increase incrementally over three (3) years.
3. The new qualifying criteria will be effective for financial statements with fiscal years beginning on or after January 1, 2025.
4. The criteria under the current Practice Directive will remain in effect until 31 December 2024.

Other Conditions

1. Companies which have been dormant since their incorporation or have been dormant during the immediate past and the current financial year are also EXEMPT from the audit requirement.
2. The exemption under this Practice Direction does not apply to:
   • An exempt private company that has elected to file a certificate of its exempt private company status with the Registrar pursuant to section 260 of the CA 2016;
   • A private company that is a subsidiary of a public company; and
   • A foreign company.
3. If a company ceases to qualify for exemption from audit, it will cease to be exempt but will remain exempt in respect of the accounts for the financial years in which it qualifies.

* The other conditions remain the same as in the existing Practice Direction.

Implication

1. An estimated 42% of active companies are expected to benefit immediately from this first-phase.
2. Several factors need to be considered that could result in a lower number of eligible companies, i.e:
   1. Employee Thresholds
      The number of eligible companies under this proposal does not take into account the number of people employed by companies.
   2. Financial Institutions Requirements
      Companies with existing obligations to these institutions or plans to secure financing facilities may still need to continue to have their financial statements audited in order to meet their obligations. Based on the statistics as of October 2024 on the charges registered with the SSM, 34% of active companies have unsatisfied charges and may continue to have their financial statements audited.
   3. Regulatory Requirements
      Certain agencies, such as governmental or other relevant authorities, may have regulatory requirements that mandate the submission of audited financial statements regardless of the company or financial status.
   4. Other Legal Obligations
      Certain legal obligations, such as contracts or grants, might stipulate the need for audited accounts, and the company may opt to continue with the audit.

While providing certain benefits, the audit exemption also raises certain practical considerations regarding the concerns of various stakeholders regarding the accuracy, reliability and transparency of the unaudited financial statements. The decision to apply for an audit exemption should be carefully considered based on the company’s size, financial complexity, stakeholder needs and future business plans. While an audit exemption reduces compliance costs, companies must ensure that financial governance remains strong to maintain trust and transparency.