A power of attorney issued in the Netherlands is a written authorization for one person (the representative or agent) to represent and act on another person’s behalf (principal or the donor of the power). The power of attorney may grant powers in private affairs, it can be used for business issues or to perform other judicial acts.
This legal instrument can be useful in a variety of business situations, from company formation in the Netherlands to nominee director services to handling only specific company matters when foreign investors who own a Dutch company cannot be present in the country. Nevertheless, it is recommended to use the power of attorney with due diligence and by appointing capable and trustworthy individuals. Protection against unauthorized representation is possible with the help of our Dutch lawyers.
Our team can provide you with all of the needed details if you need to conclude a power of attorney for a general or a specific purpose. Below, we describe the main types of documents available for this purpose as well as the situations in which the document becomes null.
Types of power of attorney in the Netherlands
The power of attorney can be a general or a special one, as well as temporarily limited.
A general power of attorney covers all affairs of the principal and the representative can take all necessary decisions, either personal or business-related. It is truly general in purpose and the agent may handle all of the needed tasks on behalf of the donor or power, including signing documents or agreements in the Netherlands.
A special power of attorney
is limited to a specific act and only covers the power to perform such an act. However, a power of attorney
that has been granted with the purpose to complete a specific goal covers or legal representation in the Netherlands
, all of the administrative acts that may be useful to complete that goal. It is recommended that for this purpose the document will specifically state the action that is to be performed and the additional tasks that may be performed as needed for the main one. It is always recommended to consult with one of our lawyers in the Netherlands before signing this type of document as our team can advise you on how to clearly formulate the limited power of attorney.
A limited power of attorney is only granted during a predefined period. It can also refer to a specific task, as most special powers of attorney can also be included in this category. This can sometimes be referred to as a non-durable power of attorney and can also cease to produce effects if the donor of power becomes incapacitated.
The medical power of attorney is a variant of the special one with clear goals concerning the medical and healthcare decisions of the donor or power. When this power of attorney is in effect, the agent will take all of the medical decisions on behalf of the principal.
The springing power of attorney is one that is set to come into force after a certain future event takes place. This can be a durable or a non-durable one and it can easily be used for personal as well as for business purposes. For example, a foreign company owner in the Netherlands can use this type of power of attorney in case a certain event takes place and it needs to be acted upon while he is not in the country. For personal purposes, it may come into effect in the event in which the principal becomes incapacitated.
These forms of power of attorney are to be notarized and signed by the parties before they can enter into effect.
The power of attorney allows for juridical acts that produce effects only for the principal, within the granted limits of authority.
In some cases, a subsequent ratification may be given for a judicial act performed in the name of another person. For example, when an individual acting as representative performs an act in the name of another without having the proper authority to do so, then the individual that was represented for the given purpose may ratify the judicial act and, by doing so, it provides the same legal effects as in the case in which it would have been performed on the bases of a predated power of attorney or legal document that provided the adequate authority.
Other provisions for power of attorney in the Netherlands
A representative can grant his or her received authority through a power of attorney to another person. Unless the principal has provided otherwise, there are certain case in which the Dutch power of attorney may be transferred:
- if the right to transfer arises as a necessity for performing the judicial act;
- if it observes the best interests of the principal and the principal is unable to make the transfer himself;
- if the power of attorney concerns assets that are located outside of the Netherlands.
When working with a notary in the Netherlands for the purpose of drawing up a notarial act, any powers of attorney from which the persons concerned by the act shall be attached to it (when the power of attorney was not drawn up by the same notary and it is not part of its records).
When an individual acts under an oral power of attorney, the notarial act shall mention this fact, together with a conformation by the notary that he has received evidence as per the existence of the power of attorney. If no such confirmation can be provided, then the notary shall attach a written power of attorney as needed.
A representative may only grant the authority received under such a document (also known as substitution) in the following cases:
- when doing do is directly connected with the nature of the juridical act that is to be performed;
- when this is necessary in the vest interest of the principal and the principal cannot handle the action himself;
- when the power of attorney concerns assets that are not located in the jurisdiction in which the representative is based (has his domicile).
When a power of attorney is granted to two or more representatives (they have joint authority to represent the principal) then each of them may perform the juridical act independently, or as provided otherwise in the document. Joint representation may be needed in some cases or when there are several steps that need to be handled and the principal wishes to appoint two individuals who will handle the process more easily or more effectively. If this is something you are interested in for the purpose of company formation or company management, you can discuss more with our Dutch attorneys. Further down in this article our team also describes the main uses of a power of attorney.
Individuals or entrepreneurs who need to work with a notary in various areas of law and for certain notarial acts can reach out to our team of lawyers in the Netherlands for assistance on contacting a specialist and drawing up the agreement or needed statement.
Termination of a power of attorney in the Netherlands
A power of attorney ceases to produce effects when:
- the principal dies;
- the principle is put under adult guardianship;
- the principle is bankrupt;
- the principal revokes the power of attorney;
- the representative has performed all duties.
If the principal dies or is put under adult guardianship the representative remains authorized to perform judicial acts, as defined by the power of attorney, if necessary for the management of the principal’s business. Also, the representative can still perform the duties assigned to him or her under the power of attorney if the postponing of the duties can harm the principal. The authority for representation ends after one year after the occurrence of the aforementioned events.
Power of attorney uses for doing business in the Netherlands
For most business owners, a power of attorney is a legal instrument that can help them in their business activities in the Netherlands. It is especially useful for foreign investors who cannot be present in the country at all times. Some of the uses can include the following:
- opening a new company or a branch in the Netherlands: via a power of attorney, an appointed agent in the Netherlands can handle all of the document submissions and communications with the authorities when the foreign investor cannot be present in the country;
- business management: through a general power of attorney, a trusted agent can manage all the business transactions and business decisions, with full authority and power.
- banking: a power of attorney can also be used for appointing an agent to manage existing bank accounts or opening new bank accounts as needed.
- business property management: the power of attorney can also be used to delegate the management of certain business properties;
- taxation: the agent can handle all of the needed tax-related issues for the company, including making the necessary submissions to the relevant tax agencies.
- investment: a designated agent can make investments on behalf of the principal as needed.
Entrepreneurs in the Netherlands can use the pre-drafted power of attorney templates and then handle the authentication in front of a notary public together with the agent. However, while this may be useful in some cases and for specific purposes, it is recommended to draw up the document specifically. By doing so, you clearly state the agent’s powers and whether or not his decisions will be binding under the power of attorney once it enters into force. One of our lawyers in the Netherlands can help you include special clauses in the power of attorney as well as refer to any types of situations that may be specific to your case.
The power of attorney is an important tool for estate planning purposes but also for many business purposes, especially in the case of foreign investors. The power of attorney can play an important role in business continuity.
Doing business in the Netherlands
The Netherlands offers a welcoming business climate and entrepreneurs in many business fields can find it fruitful to start a company here. When doing so, working with a local representative, such as one of our lawyers in the Netherlands, as well as having drawn up a power of attorney is useful for the daily management of the business, as well as during the pre-registration stages when assistance may be required and in some cases even mandatory.
Those who are interested in opening a company here should know that economic growth in the country remains relatively constant, with a 2.7 percent increase in 2017. The data shows that the country has had many years of consecutive growth. Other figures are also encouraging to foreign investors:
- in 2018 the turnover in the business services sector was 33% higher compared to 2008;
- the same year, the business services sector was the most significant contributor to the number of new companies: the largest increase was that of management consultancy firms, 7,000;
- of all the companies established in 2018, 97% had only one employee;
- in 2018 many industries recorded an increase of businesses; this took place in areas such as transport, trade, accommodation and food services; a notable trend was the increase of webshops, with more than 2,940 new companies – a trend that is likely to remain in the coming years.
Working with a local representative to start a business in the Netherlands is convenient for many investors, as it means that travel to the country is not mandatory in all cases and the procedures that must be handled in person can be scheduled in a convenient manner.