Collaborating via a joint venture: how does it work?

A joint venture is a partnership in which two or more companies collaborate intensively in specific areas but remain independent in other respects. You can structure this with a joint subsidiary or, without a separate company, with an extensive cooperation agreement (the “virtual” joint venture). Which form is most suitable depends on liability, taxation, and the desired flexibility.

Companies wishing to collaborate closely can merge, but in doing so, they give up their own identity. If this is not desirable and you only wish to collaborate in specific areas, a joint venture is often a more attractive option. We explain what it is and what you should look out for.

What is a joint venture?

A joint venture is a partnership in which parties collaborate in certain domains and remain independent in others. The basic principle is that the companies have common goals and reinforce each other. For example, one company has the knowledge to bring a product to market, while the other has the production capacity. Economies of scale can also be the reason.

In the Netherlands, the joint venture is not regulated by law as a separate legal form. As a result, the parties have considerable contractual freedom to structure the collaboration as they see fit — but this freedom also brings challenges, because you yourself must properly document everything.

What forms of joint venture are there?

A joint venture can take various forms, always involving at least two independent companies.

1. Joint subsidiary (equity joint venture)

The parties jointly establish a new company. Usually, this is a private limited company (BV), sometimes a public limited company (NV) or a general partnership (VOF). Budgets, tasks, and responsibilities are assigned to that company, with clear agreements regarding its operation.

2. Virtual joint venture (contractual cooperation)

In this case, no separate company is established; instead, the parties record everything in a cooperation agreement. Such an agreement can be made fully enforceable, but it does not offer protection against liability in the same way that a separate legal entity does.

What is a Joint Venture Agreement (JVA)?

The written agreements are often recorded in a Joint Venture Agreement (JVA). This is an umbrella term: a JVA can be a classic cooperation agreement, but the agreements can also be included partly in a shareholders' agreement and partly in the articles of association . How you structure it depends on the chosen form.

Choosing a legal form: liability and taxation

The choice between a partnership (such as a general partnership) and a legal entity (such as a private limited company) has major consequences:

• Partnership or virtual joint venture — flexible and quick to set up, but with a liability risk for the partners.
• Legal entity (BV/NV) — limits the liability risk and can be more tax-efficient, but is more expensive to set up, requires separate annual accounts, and entails more extensive record-keeping obligations.

Which form is most fiscally and legally advantageous varies depending on the situation. Have this calculated in advance.

What other agreements are you recording?

The mutual agreements are at least as important as the legal form. Clearly define what the parties do jointly, how they retain control, and how they divide income and costs. Confidentiality agreements are also almost always necessary, as parties share sensitive information with each other.

Frequently Asked Questions

What is the difference between a joint venture and a merger?

In a merger, companies (partially) merge and lose their independence. In a joint venture, the companies remain independent and collaborate only in defined areas.

Do I need to set up a separate BV for a joint venture?

Not necessarily. You can also collaborate contractually (virtual joint venture). A separate BV does limit the liability risk, but it entails higher costs and administration.

Is a joint venture regulated by law in the Netherlands?

No, there is no separate statutory legal form called a “joint venture”. You structure the collaboration using existing legal forms and contracts, which offers a great deal of freedom but requires clear agreements.

Setting up a joint venture legally soundly

A joint venture involves many legal choices: legal form, liability, control, profit distribution, and confidentiality. Therefore, seek advice in advance. The legal experts at MKB Juristen help you choose the right structure and legally formalize the agreements. View our expertise in corporate law or schedule a free intake consultation .