Divorce for entrepreneurs: valuing a business in the Netherlands

In a Dutch divorce, a business is valued in two steps. First you establish whether the company, or the value it gained, belongs to the matrimonial estate under your property regime; only then does an independent valuer put a figure on it, usually with a discounted cash flow or a market method. The main exception: even when the company stays entirely outside the estate, your spouse may still have a compensation claim, and for entrepreneurs that claim is often worth more than the shares.

Two dates decide the outcome. What falls into the community is fixed on the day the divorce petition is filed (article 1:99 of the Dutch Civil Code, BW). The value is in principle set at the moment the assets are actually divided. A business that grows or shrinks in between therefore changes the settlement. Below we explain how each step works, what the valuer looks at and how you turn a figure into a workable agreement.

Which matrimonial property regime applies to your business?

The regime decides whether there is anything to divide at all. Dutch law has three basic situations, and the date of your marriage is the deciding factor.

What if you married before 2018 without a prenuptial agreement?

Then you are married in the general community of property, unless you signed huwelijkse voorwaarden (a prenuptial agreement). Everything each spouse owned before the marriage and everything acquired during it, including a business and its debts, belongs to that community. It does not matter whose name is on the shares or the trade register entry. The only exceptions are assets received as a gift or inheritance with an exclusion clause.

On divorce the community is divided in equal shares (article 1:100 BW). This is not a discretionary division as in common law systems. The starting point is half for each spouse. A court departs from it only in exceptional circumstances, and it rarely does.

What if you married on or after 1 January 2018 without a prenuptial agreement?

Then the limited community of property applies by law (article 1:94 BW). What each spouse owned before the marriage stays private. Gifts and inheritances also stay private, whenever you receive them. What you build up together during the marriage becomes common property.

For an entrepreneur who started the company before the marriage, that sounds reassuring. The next rule, however, decides many cases. Under article 1:95a BW, the community is entitled to a reasonable compensation when a spouse devotes knowledge, skills and labour to a private business. In practice: a company kept out of the estate may still have to pay the estate for the work put into it, to the extent you did not already take a market-level salary out of the business. How courts calculate that compensation is still developing in case law, so expect argument about it.

How do a prenuptial agreement and its settlement clause affect the business?

A prenuptial agreement can exclude the business entirely. For many entrepreneurs that is exactly why they signed one. The risk lies in the settlement clause (verrekenbeding).

Most Dutch prenuptial agreements contain a periodic settlement clause: each year the spouses divide the income they have not spent. In practice almost nobody does this, and the law attaches a heavy consequence to it. Under article 1:141 paragraph 3 BW, if the yearly settlement was never carried out, the assets present at the end of the marriage are presumed to have been formed from income that should have been settled. They are then divided on that basis, unless you prove otherwise.

Profits left inside the BV are the classic example. Under article 1:141 paragraph 4 BW, retained profits of a company you control can count as income, if the clause covers business profits and paying them out would have been reasonable. Reviewing the agreement, and the yearly settlements that were or were not made, is therefore the first substantive step in any divorce in the Netherlands involving a company.

What about a registered partnership or living together?

A registered partnership follows the same property rules as marriage. There is one procedural difference. If you have no children under 18 and you both agree, you can end the partnership without a court, through an agreement drawn up by a lawyer or civil-law notary that is then registered (article 1:80c BW).

Unmarried cohabitants have no matrimonial property regime at all. Their position depends on their cohabitation contract, on joint ownership of specific assets and on general property and contract law. A cohabitant who worked in the other partner’s business for years without pay has no automatic claim on its value. That is why a clear contract matters more, not less, when there is no marriage.

Does the business belong to the estate, and what must be compensated?

Whether the company itself is divided is a question of ownership. Whether money flows between you is a question of compensation. The two are often confused, and entrepreneurs lose most on the second.

If the business falls inside the community, its value belongs to both spouses in equal shares. It does not matter who ran it or whose name is in the trade register. If it falls outside the community, three types of claim can still arise:

• Reimbursement right. If private money was used to acquire or improve an asset of the other spouse or of the community, or the other way round, the paying party has a claim (article 1:87 BW). If the money went into an asset, the claim generally rises and falls with the value of that asset instead of staying at its nominal amount.
• Compensation for work. In a limited community, the community can claim a reasonable compensation for the knowledge, skills and labour you devoted to your private business (article 1:95a BW).
• Unperformed settlement clause. A prenuptial agreement with a periodic settlement clause that was never carried out can lead to a claim on the assets present at the end of the marriage.

Why does mixing private and business money cause problems?

Because every mixed payment has to be traced afterwards. Paying private expenses from the business account, running household costs through the company, lending money between you and the BV without paperwork, or letting the joint home secure a business loan creates a tangle. It has to be unravelled transaction by transaction.

Dutch courts expect the party who claims that an asset is private, or that a reimbursement is due, to prove it with bank statements, deeds and accounts. Where the administration is incomplete, the outcome tends to favour the spouse who does not hold the records. Keeping the property side of family law clean during the marriage is far cheaper than reconstructing it later. Good asset protection for business owners is largely a matter of that discipline, not of clever structures.

Which dates count for composition and value?

Two different reference dates apply: one for what is in the estate, and one for what it is worth. Mixing them up leads to arguments that are entirely avoidable.

The composition of the community is fixed on the day the divorce petition is filed with the court (article 1:99 paragraph 1 BW). From that moment the community is dissolved between the spouses. What one of you earns or acquires afterwards is your own, and so are debts you take on afterwards. For a business owner this is the practical dividing line. It is one reason why the timing of the filing is a decision, not an administrative step.

The value, by contrast, is in principle determined at the moment the assets are actually divided. That can be months or even years later. You may agree on a different valuation date, and a court can depart from the main rule where reasonableness and fairness require it, for instance when one spouse deliberately delayed the division while the value moved. Because the two dates differ, a business that performs well after the filing date increases what the other spouse receives, and one that collapses reduces it. Agree the valuation date early, in writing, and a whole category of dispute disappears from the file.

How is a business valued?

Dutch family law prescribes no statutory valuation method. Courts appoint or accept an expert and follow a properly reasoned report. The choice of method and the assumptions behind it therefore decide the outcome in practice. Three approaches are used, and a good report explains why one was chosen.

What is the income approach and discounted cash flow?

The income approach values the company on what it is expected to earn. The discounted cash flow (DCF) method projects free cash flows over a forecast period, adds a terminal value and discounts everything back to today, using a rate that reflects the risk of the business.

Most valuers prefer this method for an operating company, because it looks forward rather than backwards. It also leaves the most room for argument. The forecast, the discount rate and the normalisation of the entrepreneur’s own salary each move the result substantially. Where earnings are stable, a simpler capitalisation of maintainable earnings can produce a defensible figure at lower cost.

What is the market approach?

The market approach derives the value of the company from what comparable businesses actually sold for, expressed as a multiple of turnover or earnings. It is transparent and easy to explain. It does depend on genuinely comparable transactions, and for a small Dutch company in a specialised niche those often do not exist. Multiples taken from listed companies or from another market are a starting point, not an answer. They need adjustment for size, dependence on the owner and marketability.

What is the asset approach?

The asset approach adds up the assets and deducts the liabilities, at book value or at adjusted market value. It suits asset-heavy businesses, holding companies and companies that are being wound up. For a profitable operating business it usually understates the value, because it ignores earning capacity. Treat it as a floor rather than as the answer.

Whatever the method, some items need to be identified separately: intercompany positions, the director’s current account and pension obligations inside the company. In an owner-managed group these are often the largest single items on the balance sheet.

How are goodwill, minority stakes and the legal form dealt with?

Goodwill is where valuation reports differ most. Minority stakes are worth less than their percentage. And the legal form of the business determines what exactly is valued.

Does personal goodwill count?

Dutch practice distinguishes between goodwill tied to the business and goodwill tied to the person. Brand recognition, location, systems, a trained workforce and a contracted client base stay with the company when it changes hands. That value belongs in the estate.

The reputation, skills and personal client relationships of the entrepreneur do not transfer. If the clients follow the person, the value follows the person too. Treating it as a divisible asset would in effect force you to buy back your own future earning capacity. That same earning capacity is also taken into account when spousal maintenance is calculated. Counting personal goodwill twice is a real risk, and it is worth addressing explicitly in the settlement.

How are minority stakes valued?

A stake that carries no control and cannot be sold freely is worth less than the same percentage of the whole company. Valuers apply discounts for lack of control and lack of marketability. A shareholders’ agreement or a transfer restriction in the articles of association may cap what the stake can realistically fetch, sometimes through a fixed price formula that the court will take into account. Where the co-shareholders are relatives, the family business dimension adds informal loans, undocumented arrangements and a strong wish to keep the company out of the divorce entirely.

Does the legal form of the business matter?

Yes. It determines what is valued and who is liable.

• Eenmanszaak (sole proprietorship). The business has no separate legal personality. Its assets and debts are those of the entrepreneur and follow the matrimonial regime directly.
• Vennootschap onder firma (general partnership, VOF). The partnership agreement governs what happens on divorce. Each partner remains jointly and severally liable for debts incurred while they were a partner, also after leaving.
• BV (private limited company). The shares are valued, not the business assets. The articles usually contain a transfer restriction, so a spouse who receives shares cannot simply sell them on.
• Startups without a profit history. These are valued on projections and on the terms of the last funding round. The margin of uncertainty is wide, and the settlement should reflect it rather than hide it in a single number.

What if both spouses are involved in the business?

Then the divorce is not only a valuation exercise but also a corporate separation. Where you are co-shareholders, the divorce does not end the company relationship. You remain shareholders, and possibly directors, towards each other and towards third parties until that is arranged separately.

Two files therefore have to be settled at the same time: the matrimonial one and the corporate one. The corporate file usually needs a share transfer by notarial deed, a resignation and discharge of the departing director by the general meeting, an amendment or termination of the shareholders’ agreement, and a filing with the trade register.

What if the shareholders cannot agree?

Company law offers its own routes under the Dutch dispute settlement rules (geschillenregeling). A shareholder whose conduct harms the company’s interests can be ordered to transfer their shares (article 2:336 BW). A shareholder whose position has become untenable can demand to be bought out (article 2:343 BW). Both are court procedures with their own valuation rules, and they run alongside the divorce rather than inside it.

A fifty-fifty deadlock is the most damaging situation. Neither party can pass a resolution, and the company drifts while the personal conflict grows. An interim arrangement on signing authority, salaries, distributions and access to the accounts, agreed as soon as the separation is announced, prevents most of that damage.

What if your spouse works in the business?

A spouse who worked in the business without a formal position or without pay has no automatic claim on the value of the company. That work will, however, show up in the compensation claims described above and in the maintenance calculation.

If your spouse is formally employed, ordinary employment law applies. The divorce itself is not a ground for dismissal. Dismissal requires a reasonable ground under article 7:669 BW, and in most cases prior approval from the UWV (Employee Insurance Agency) or a ruling by the subdistrict court. A seriously disrupted working relationship can be such a ground, but courts apply it strictly. Settling the employment relationship on proper terms, in a separate agreement, keeps it out of the divorce negotiation. Starting the divorce procedure with that already arranged shortens everything that follows.

Who carries out the valuation?

Usually a registered business valuator (Register Valuator, RV) or an accountant with demonstrable valuation experience. What you need is someone who can explain and defend the method in court, understands Dutch accounting practice and the tax position of an owner-managed company, and can normalise the entrepreneur’s salary and the private items running through the books.

One joint expert or two separate reports?

A single joint expert, instructed by both spouses on an agreed brief, is faster and cheaper. It is also far more likely to produce a figure both sides can accept. Two separate reports let each spouse present their strongest case. They usually end with the court appointing its own expert, so you pay three times.

If the court appoints an expert, you can comment on the questions and on the person to be appointed, and the report becomes the backbone of the decision. Where figures look manipulated, where income was depressed in the run-up to the divorce or where private spending was booked as business cost, a forensic review of the accounts is the right answer. Its corrections feed back into the valuation. A lawyer with corporate experience alongside the family lawyer is useful here, because the arguments are as much about company law and accounting as about family law.

How do you turn a value into a settlement?

A valuation is a means, not an end. Once there is a figure, there are three ways to settle it:

• you buy out your spouse, in cash or in instalments;
• the business value is offset against other assets, typically the home, savings or pension rights; or
• in the worst case, the company is sold and the proceeds are divided.

A buyout keeps the business intact, and most entrepreneurs want it. It must be affordable, though. A payment obligation that strips the working capital out of the company harms both of you, since the paying spouse still has to earn the instalments. Instalments with security, a deferred payment linked to results, or a mix of an offset and a smaller cash payment are usually more realistic than one lump sum.

What happens to business debts?

Business liabilities reduce the net value available for division. Who bears which debt after the divorce depends on when and why it was incurred. Where the community is divided, creditors can in principle address both spouses for community debts. The settlement agreement should therefore state expressly who bears what between you and, where possible, provide for a release by the bank.

How does the valuation affect maintenance?

Directly. Income actually drawn from the business and income you could reasonably draw are both relevant when spousal maintenance is calculated. A court can attribute earning capacity to an entrepreneur who holds back distributions during the proceedings. Conversely, a large buyout can reduce the need for spousal and child support, and a later change in the business can be a ground to have the amount recalculated.

What about pension and tax?

Pension rights are settled separately. Under the Pension Rights Equalisation on Divorce Act 1994 (Wet verevening pensioenrechten bij scheiding), each spouse is in principle entitled to half of the old-age pension accrued during the marriage. The planned replacement act has been postponed, so the 1994 act still applies. If you notify the pension provider within two years of the divorce, the provider pays your share to you directly. For a director-major shareholder with pension obligations inside the company this deserves particular attention, as our guide to pension on divorce explains.

Tax runs through all of it. Transferring shares or business assets between spouses, buying out a share in a BV or ending a sole proprietorship can each have income tax or transfer tax consequences, and timing affects them. Law & More does not give tax structuring advice. Involve your tax adviser before the settlement is signed, and make sure the legal documents match what the tax adviser has assumed.

What must you disclose, and what if you do not?

You must give full information about the estate, and deliberately hiding an asset costs you your entire share in it. A valuation is only as good as the information behind it, and Dutch law backs this up with a duty rather than a request.

Spouses owe each other information about the community, and in proceedings both parties must present the relevant facts completely and truthfully (article 21 of the Dutch Code of Civil Procedure, Rv). A court can draw the conclusion it sees fit from a refusal to produce documents. Where you have no access to the company records, you can ask the court to order the production of specific, identified documents (article 843a Rv). In practice the mere prospect of such an order usually opens up the file.

What is the sanction for concealing assets?

Under article 1:135 paragraph 3 BW, a spouse who deliberately conceals or hides an asset belonging to the community forfeits their entire share in that asset to the other spouse. Many people do not know this rule. It is not a fine and not a correction of the division: the concealed asset goes to the other spouse in full.

Undeclared foreign accounts, stock left off the balance sheet, an invoice diverted to another entity or a customer list quietly moved to a new company can all fall within reach of that rule. The loss of credibility after discovery also affects every other item in dispute.

Which documents should a business owner prepare?

Prepare the file rather than defend it. The core set is:

• annual accounts for the last three to five financial years, current interim figures and the general ledger;
• the director’s current account and the private drawings from the business;
• the shareholders’ register, the articles of association and the shareholders’ agreement;
• the main customer and supplier contracts and the lease;
• financing and security documents and pension commitments.

Handing this over completely and early is not a concession. It is what allows a joint expert to be instructed, which is by far the cheapest route through the whole process. Our overview of property division under Dutch family law explains how these documents feed into the division itself.

Which mistakes cost entrepreneurs money?

The same errors recur in almost every file. Most of them can be avoided with preparation.

1. Assuming the prenuptial agreement settles everything. An agreement that excludes the community says nothing about compensation claims. An unperformed settlement clause can hand your spouse a share of exactly the value the agreement was meant to protect. Read the clause before you rely on it.
2. Treating the company account as a private account. Every private payment from the business, and every business cost paid privately, creates a claim one way or the other. Years of small movements produce a reconciliation that costs more in fees than the amounts involved.
3. Running the business down during the proceedings. Postponing invoices, holding back distributions or moving work to a new company rarely helps. Valuers correct for it, courts attribute earning capacity when setting maintenance, and moving activities to a new entity can attract the concealment rule. Where creditors are harmed, the transaction can also be challenged.
4. Agreeing a buyout without a payment structure. A figure agreed in principle, without dates, security, an interest rate, consequences for late payment and a mechanism for when the business cannot pay, invites a second procedure.
5. Forgetting the bank. An internal agreement that you bear the business debt does not release your spouse towards the lender. Only the lender can do that.
6. Treating maintenance and division separately. They interact directly. A settlement that takes a large capital sum out of the business but leaves the maintenance calculation untouched is unlikely to hold, as our guide to maintenance in the Netherlands shows.

The last mistake is procedural. Mediation, or a negotiated settlement recorded in a divorce covenant (echtscheidingsconvenant), gives you control over the valuation date, the method, the expert and the payment terms. Litigation hands all four to the court. For an entrepreneur whose business must keep running while the dispute lasts, that difference is usually worth more than any argument about a multiple.

What should you do next?

Three steps make the biggest difference. First, establish your regime and read the prenuptial agreement, including the settlement clause and the yearly settlements that were or were not made. Second, fix the reference dates in writing before negotiations start. Third, instruct a valuer jointly if at all possible, with a brief both sides have seen.

We advise entrepreneurs and their partners on divorce, matrimonial property, compensation claims, buyouts and the agreements that record them. Our divorce lawyers work together with our family law specialists and corporate lawyers, so the matrimonial and the company side are handled in one file.

In summary

• First establish whether the business, or its growth in value, falls into the estate under your property regime; only then value it.
• A business outside the estate can still lead to claims: reimbursement (article 1:87 BW), compensation for work (article 1:95a BW) or an unperformed settlement clause (article 1:141 BW).
• The composition of the estate is fixed on the filing date of the petition; the value is in principle set at the moment of division, unless you agree otherwise.
• There is no statutory valuation method; a joint expert with an agreed brief is usually the fastest and cheapest route.
• Full disclosure is required: deliberately concealing a community asset costs you your entire share in it (article 1:135 paragraph 3 BW).

Frequently asked questions

Business owners facing divorce in the Netherlands often need clear answers about valuation procedures, the legal framework and how prenuptial agreements affect their companies. The questions below cover the most common concerns about valuation, tax and the role of professional valuers.

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