VOF and divorce: how do you separate as spouses and business partners?

If you and your spouse also run a general partnership (vennootschap onder firma, VOF) together, a divorce ends two relationships at once: the marriage and the partnership. Each follows its own rules, and the main exception to a smooth separation is liability: each partner remains liable towards creditors for the partnership’s debts, whatever you agree between yourselves in the divorce.

The partnership is dealt with under the partnership agreement and the law on partnerships. That determines whether one partner may continue the business alone, on what basis the other is bought out, and what happens if neither wants to continue. Without an agreement, the statutory rules apply, and they rarely match what the partners assumed. A VOF is not a legal entity. Under Article 18 of the Dutch Commercial Code (Wetboek van Koophandel, WvK), each partner is jointly and severally liable for its obligations. That liability does not end with the divorce: a partner who leaves remains liable for obligations that arose while he or she was a partner, and needs the cooperation of creditors to be released.

The marriage is dealt with under matrimonial property law. If the partnership share falls within the community of property, its value is divided. If you have prenuptial agreements, the outcome depends on what they say and, crucially, on whether a periodic set-off clause was actually performed. Under Article 1:95a of the Dutch Civil Code (BW), the community may also be entitled to compensation if a spouse worked in his or her private business without reasonable remuneration.

Valuation is where the two strands meet, and it is usually the real dispute: which valuation date applies, whether goodwill counts, and how to value a business that depends on the personal efforts of one partner.

In practice, it helps to take the decisions in this order: first establish your marital property regime and the partnership agreement, then have the business valued, then choose between buy-out, sale and dissolution, and only then record everything in the settlement agreement and arrange the release from liability.

What does a double separation mean for spouses in business?

You end a marriage and a business partnership at the same time, under two sets of rules. Deal with both together, otherwise a decision about the business can undermine the divorce settlement, or the other way round.

How do the two legal frameworks interact?

Your marital property regime determines how private assets and debts, including the value of your partnership share, are divided. The partnership agreement determines what happens to the business itself.

At the same time, your partnership agreement (vennootschapscontract) should state what happens when a partner leaves. It is your main guide for the business side: how the business is valued, whether a partner may be bought out and how the partnership is wound up.

How do your VOF and your marital property regime fit together?

Everything depends on two things: what a VOF is legally, and which marital property regime applies to you. Establish both before you start negotiating.

A VOF is not a legal entity. Under Article 18 of the Commercial Code each partner is jointly and severally liable, so a creditor can claim the full amount of a business debt from either of you. In a separation, that fact alone creates a lot of pressure.

A VOF does have its own separated assets (afgescheiden vermogen). Creditors of the partnership can recover their claims from the partnership’s assets first, before the private creditors of the partners. But if the partnership’s assets are insufficient, they can turn to the private assets of each partner.

Which Dutch marital property regimes are there?

There are three: the full community of property, the limited community of property and prenuptial agreements. Your wedding date and any agreements you made determine which applies.

• Full community of property (algehele gemeenschap van goederen): the default for couples who married before 1 January 2018 without prenuptial agreements. In principle all assets and debts, from before and during the marriage, fall into one joint pot, which is divided equally on divorce. Gifts and inheritances with an exclusion clause remain outside it.
• Limited community of property (beperkte gemeenschap van goederen): the default for couples who married on or after 1 January 2018 without prenuptial agreements (Article 1:94 of the Dutch Civil Code). Only the assets and debts acquired during the marriage are joint. What you owned before the marriage, and gifts and inheritances, in principle remain private. Assets you owned jointly before the marriage do fall into the community.
• Prenuptial agreements (huwelijkse voorwaarden): a contract, drawn up by a civil-law notary, in which you determined what is joint and what is private. For the VOF, what these agreements say is decisive.

If your marriage has an international element, first check which law applies to your matrimonial property. That may be foreign law, depending on your nationality, your residence after the wedding and any choice of law.

How does your regime affect the business?

In a full community of property, your partnership share is almost always a joint asset. In a limited community, it depends on when the business was started; with prenuptial agreements, on their wording and whether you performed them.

If you are married in full community of property, your share in the VOF is almost always a joint asset, even if your spouse was not involved in the daily business. If you are both partners, both partnership shares fall into the community.

In that case the value of the business must be assessed professionally, and in principle each spouse is entitled to half of it. Prenuptial agreements that clearly exclude the VOF from any sharing lead to a different and often simpler outcome.

In a limited community of property, a share in a VOF that one spouse had before the marriage in principle remains private. But the community may be entitled to compensation under Article 1:95a of the Dutch Civil Code if the spouse worked for the business without reasonable remuneration. Profits made during the marriage and taken out of the business usually do fall into the community.

Many prenuptial agreements contain a periodic set-off clause (periodiek verrekenbeding): each year the spouses must share what is left of their income. If you never performed that clause, Article 1:141(3) of the Dutch Civil Code presumes that the assets present at the end of the marriage were formed from income that should have been shared, unless the contrary is proven. That can bring the value of the business into the settlement after all.

How do the marital property regimes affect a VOF in a divorce?

The table gives a quick overview. The outcome in your case always depends on the facts, including when the business was started and what you agreed.

Also note the reference date. In a community of property, the composition of the community is in principle fixed on the date the divorce petition is filed (Article 1:99 of the Dutch Civil Code). The value is in principle determined at the time of the division, unless you agree otherwise. For a business whose value changes quickly, that difference can be significant.

Which financial obstacles arise when separating a VOF?

Three financial points determine the outcome: the value of the business, its debts and the tax consequences. Deal with each of them explicitly.

How is the partnership valued?

Have the business valued by an independent expert, using a method that fits the business. The valuation forms the basis for any buy-out, sale or division.

There are several common approaches to valuing a VOF:

• Asset-based valuation: the simplest method. You add up the value of all the assets of the business (cash, equipment, property, stock) and deduct all liabilities (debts, accounts payable). It answers the question: ‘What would be left if we sold everything and paid all debts today?’
• Earnings-based valuation: this method looks at the ability of the business to generate future profits. It often applies a multiple to current or expected earnings, such as EBITDA (earnings before interest, taxes, depreciation and amortisation). This is useful for profitable, stable businesses.
• Market-based valuation: this method compares your VOF with similar businesses that were recently sold. It is a reality check based on what the market pays for a comparable business.

Goodwill is often disputed. If the profit depends largely on the personal skills and relationships of one partner, part of the goodwill is personal and cannot easily be transferred. Courts take that into account when they assess what the business is worth to the partner who continues it. Choose the method with the help of a valuation expert and, preferably, agree on one independent valuer rather than each commissioning your own report.

Why does liability for debts continue after the divorce?

Because each partner is jointly and severally liable towards creditors, and your divorce agreement does not bind them. You are only released if the creditor agrees or the debt is paid.

One of the hardest realities of a VOF is joint and several liability. Under Article 18 of the Dutch Commercial Code, each partner is liable for the full amount of the partnership’s debts, regardless of who incurred them. Your divorce decision does not end that liability.

Even if your settlement agreement states that your ex-spouse will pay a specific business loan, the creditor can still claim the full amount from you if your ex-spouse does not pay. Your private assets remain at risk until every business debt has been paid or the creditor has formally released you.

Many people overlook this. The agreements you make with your spouse are separate from the agreements the VOF has with its banks and suppliers. Contact the creditors in good time and ask them to release you, for example in exchange for new security from the partner who continues. Agree with your ex-spouse that he or she will indemnify you if a creditor still holds you liable.

Also have your exit or the dissolution of the VOF registered in the Commercial Register of the KVK without delay. As long as the register still shows you as a partner, third parties may rely on that, and you may be held liable for new obligations entered into after you left.

What are the tax and social security consequences?

Leaving or winding up the business usually leads to tax on the hidden reserves and goodwill: the discontinuation profit. Have a tax adviser calculate this before you agree on a price.

The key concept is the discontinuation profit (stakingswinst): the difference between the book value of your share in the business assets and its market value at the time of transfer, including goodwill. This profit is taxed as income from business in box 1, which can lead to a substantial tax bill. Under certain conditions, relief or a roll-over to the partner who continues the business is possible.

A change in business ownership or income can also affect income-related contributions and allowances, such as the income-related contribution under the Health Insurance Act (Zorgverzekeringswet, Zvw). Structuring the separation properly helps to limit the financial impact. We do not advise on tax structuring; for these points we refer you to a tax adviser.

For more on how assets are divided in general, read our article on Netherlands family law and property division.

Which route should you choose: buy-out, sale or dissolution?

There are three routes: one partner continues and buys out the other, the business is sold to a third party, or the VOF is dissolved and wound up. The choice depends on the health of the business, financing and what each of you wants.

Option 1: how does a buy-out by one partner work?

One spouse continues the business and pays the other for his or her share. That works if the business is profitable and the continuing partner can finance the price.

Once you have a price, you record the buy-out in a written agreement. It sets out the payment terms, the transfer of the share and of the business assets, and the date on which the transfer takes effect. It must also deal with how the leaving partner is released from ongoing business liabilities and who bears which tax consequences.

If your partnership agreement contains a continuation clause (voortzettingsbeding), it may give one partner the right to continue the business after the other leaves, with a settlement for the leaving partner (Article 7A:1688 of the Dutch Civil Code). Check whether that clause also covers leaving because of a divorce.

Financing is often the biggest obstacle. If you choose this route, talk to your bank early about financing the acquisition, and consider payment in instalments with security for the leaving partner.

Option 2: when should you sell the business to a third party?

If neither of you can or wants to continue, a sale to an outside buyer offers a clean break. You divide the net proceeds according to your agreements and your marital property regime.

A sale lets you both realise the value you built and move on. The process involves finding a suitable buyer, which can take time. You must market the business, assess potential buyers and negotiate a price. Usually the buyer takes over the business assets; the VOF itself then ends. The net proceeds, after paying debts and taxes, are divided according to your partnership agreement and your marital property regime.

The main challenge is the market. Finding the right buyer at the right price is never guaranteed, and a long sale process prolongs the financial ties of your divorce. Agree in advance on a minimum price and on what happens if no buyer is found within a set period.

Option 3: how do you dissolve the VOF completely?

You end the partnership, wind up the business and divide what is left. This is often the route if the business is not profitable or a buy-out or sale is not feasible.

A partnership for an indefinite period can in principle be ended by notice from one partner, given in good faith (Articles 7A:1683 and 7A:1686 of the Dutch Civil Code). A partner can also ask the court to dissolve the partnership for serious reasons (Article 7A:1684). After dissolution, the business must be wound up (liquidated).

The steps are methodical:

1. Stop operations: end all business activities, except those needed for the wind-down.
2. Realise the assets: sell the business assets, stock and equipment.
3. Pay the debts: use the proceeds to pay all creditors and outstanding taxes.
4. Divide the balance: divide what remains between the partners according to the partnership agreement.
5. Deregister: have the dissolution of the VOF registered with the KVK.

Although this looks clear, it is not always simple. If the proceeds are insufficient to pay all debts, creditors can still turn to each partner for the full remaining amount. Keep proper records of the winding-up, because questions from creditors or the tax authorities may come later.

The same problems arise for business partners who are not married, for example unmarried couples who run a VOF together. They do not have a divorce procedure, but must still settle the partnership and any jointly owned assets, such as a house.

What is the role of your partnership agreement and mediation?

A good partnership agreement gives you pre-agreed rules for valuation, buy-out and dissolution. Mediation helps you make the remaining decisions together, rather than having the court decide.

Why is your partnership agreement your roadmap?

Because it records, from calmer times, what happens when a partner leaves. The more complete it is, the fewer decisions you have to make under pressure.

Your partnership agreement (vennootschapscontract) is the business equivalent of prenuptial agreements. You made it, hopefully in calmer times, to set the rules for your professional relationship. In a separation, it becomes your main roadmap, with pre-agreed instructions for exactly this situation.

It should ideally include:

• Dissolution clauses: the steps to take if the partnership is dissolved, from informing creditors and realising assets to dividing what remains.
• Valuation clauses: the method for determining the value of a share, for example an agreed formula or an independent valuer, to prevent disputes.
• Continuation and buy-out clauses: the terms on which one partner may continue the business and buy out the other, including any right of first refusal, payment terms and a timetable.
• Exit events: whether a divorce between the partners is an event that triggers these clauses.

Why choose mediation rather than litigation?

Mediation lets you settle the business and the divorce in one coordinated discussion, usually faster and cheaper than court proceedings. The mediator does not decide; you do.

Read more about this approach in our article on divorce through mediation. Even if you use a mediator, have the result checked by your own lawyer before you sign, and remember that a lawyer must file the divorce petition.

What should you check as the partner who continues the business?

You take over the business, but also its risks and the financing of the buy-out price. Check these points before you sign:

• Check whether the partnership agreement contains a continuation clause (Article 7A:1688 of the Dutch Civil Code) that also covers a divorce.
• Agree on one independent valuer and on the valuation date before negotiating a price.
• Discuss financing of the buy-out price with your bank early, or agree payment in instalments.
• Have a tax adviser calculate the discontinuation profit and any roll-over before the price is fixed.
• Have the change in the partnership registered in the KVK Commercial Register straight after the transfer.

What should you check as the partner who leaves?

Your liability towards creditors under Article 18 of the Commercial Code does not end with the divorce. Check these points to limit it:

• List all business debts, loans and guarantees you signed, and ask each creditor for a written release.
• Include an indemnity from your ex-spouse in the settlement agreement for debts that remain in your name.
• Have your exit registered with the KVK without delay, so you are not liable for new obligations.
• Check whether an unperformed periodic set-off clause (Article 1:141(3) of the Dutch Civil Code) gives you a claim on the value of the business.
• Ask for security, such as a right of pledge or a bank guarantee, if the buy-out price is paid in instalments.

What can we do for you with a VOF and divorce?

Our divorce lawyers handle the divorce and the separation of the business in one coordinated file:

• We review your prenuptial agreements and partnership agreement and set out which regime and clauses apply.
• We calculate the claims between you, including set-off and compensation under Articles 1:95a and 1:141 of the Dutch Civil Code.
• We draft the settlement agreement and the separate agreement on the buy-out, sale or dissolution of the VOF.
• We draft the indemnity and request the release from banks and other creditors.
• We file the divorce petition with the court and represent you if the division of the business is disputed.

Summary

• A divorce between spouses who run a VOF ends two relationships, each under its own rules: matrimonial property law and partnership law.
• Your marital property regime determines whether the value of your partnership share is divided; with prenuptial agreements, an unperformed set-off clause can still bring it into the settlement (Article 1:141(3) of the Dutch Civil Code).
• Each partner remains jointly and severally liable for the partnership’s debts (Article 18 of the Commercial Code); your divorce agreement does not bind creditors.
• Choose between a buy-out, a sale and dissolution after an independent valuation, and have your exit registered with the KVK without delay.
• Leaving the business usually leads to tax on the discontinuation profit; have a tax adviser calculate it before you agree on a price.

Frequently asked questions