Ezel / IRS Rulings / 1032037
Chief Counsel Advice 1032037 Released August 13, 2010 Advice

CCA 1032037: A Dutch BV generally defaults to corporate classification because its members have limited liability

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This page covers one taxpayer's ruling from 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
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Plain-English summary

Chief Counsel Advice considers the U.S. tax classification of a French SA and a Dutch BV. It states that a French SA is a per se corporation and discusses the Dutch BV as an entity whose members generally have limited liability. The advice suggests that the BV defaults to corporate status unless it makes an election to be classified otherwise, and asks for confirmation of that understanding.

Ruling snapshot

  • Question: Does a Dutch BV default to corporate classification because its members have limited liability?
  • Outcome: Advice given
  • Key authorities: IRC § 7701.

Full text (IRS public release)

ID: CCA-325122-10 Number: 201032037
Release Date: 8/13/2010
Office: ----------
UILC: 7701.02-00

From: ------------------
Sent: Thursday, March 25, 2010 12:24 PM
To: --------------------
Cc: --------------------------------------------------
Subject: RE: Characterization of Foreign Entities ----------

A French SA is a per se Corporation.
A Dutch BV is described below.
A "BV" is a private company with limited liability; in Dutch: "Besloten Vennootschap met
beperkte aansprakelijkheid". In comparison to other jurisdictions the BV can be seen as the
equivalent of the German "GmbH", the American "LLC", or the English "Ltd".
The shareholders of a BV are in general not personally liable for acts performed in the name or
on behalf of the B.V., nor can they be compelled to make more funds available than that part of
the capital for which they have subscribed.

As a result, my understanding is that a BV is an eligible entity that defaults into
corporate status (because of its members have limited liability) unless it elects
otherwise.

---------do you agree?

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