When a US parent company sets up a Dutch BV subsidiary, its advisors will often suggest filing a "403 declaration" to simplify financial reporting. The pitch sounds appealing: instead of preparing and publishing separate annual accounts for the Dutch entity, the subsidiary can rely on the parent's consolidated financial statements. The cost savings on audit fees, Dutch GAAP preparation, and filing administration are real.
What many US companies fail to grasp -- until it is far too late -- is what they give up in return. A 403 declaration (403-verklaring), named after Article 2:403 of the Dutch Civil Code, requires the parent company to assume unlimited, joint and several liability for all debts arising from the subsidiary's legal acts. Every contract the subsidiary signs -- employment agreements, office leases, supplier contracts, customer commitments, financing arrangements -- creates a direct, enforceable claim against the parent. There is no cap, no materiality threshold, and the parent's liability is not a guarantee: the Dutch Supreme Court (Hoge Raad) has confirmed it is an independent obligation, meaning a creditor can pursue the parent directly without first exhausting remedies against the subsidiary. A settlement or even a full discharge granted to the subsidiary does not release the parent (ECLI:NL:HR:2015:837).
Withdrawing the declaration is possible but far more complex than filing it. The two-step process under Article 2:404 BW leaves the parent exposed for years to debts arising from legal acts performed during the declaration period. Creditors have statutory objection rights, and Dutch courts apply a creditor-friendly standard: a court must declare an objection well-founded unless the underlying claim is "unquestionably unfounded" (ECLI:NL:HR:2017:546).
What the Parent Gives Up
The liability is joint and several (hoofdelijk): the parent is liable alongside the subsidiary for the full amount of each covered debt. No subsidiarity, no cap, no limitation. Settlement with the subsidiary does not release the parent. Subordination of claims against the subsidiary does not transfer to the parent's 403 obligation (ECLI:NL:HR:2015:661, SNS expropriation case). Attempts to include monetary caps risk invalidating the entire exemption.
Scope of Liability
The 403 declaration covers debts from the subsidiary's legal acts (rechtshandelingen) -- essentially any voluntary commitment. This includes all contracts, unilateral legal acts, and obligations flowing from contracts including damages and penalty clauses. Obligations arising directly from law (tort claims, tax debts, regulatory fines) fall outside the scope.
The Withdrawal Trap
Step 1 (Revocation): The parent can revoke the declaration but remains liable for all debts from legal acts performed during the declaration period.
Step 2 (Termination of residual liability): Requires: (1) severance of the group relationship (typically a sale), (2) two-month public notice, (3) two-month creditor objection period, and (4) resolution of all objections. You cannot terminate residual liability while the subsidiary remains in the group.
A selling parent that forgets to revoke its 403 declaration before completing a sale remains jointly and severally liable for all of the sold subsidiary's future contractual debts -- debts incurred under the new owner's management.
Practical Guidance
- Check the KVK register for any active 403 declarations
- If active: Assess whether reporting savings justify the unlimited liability exposure
- Control subsidiary contracting: Every contract creates parent liability
- Never allow the subsidiary to settle claims without the parent's involvement
- Before any sale: Revoke the declaration and initiate termination procedures early
Sources
- Kennedy Van der Laan -- 403 Declaration
- PwC -- All About Section 403 Group Exemption
- Grant Thornton -- Applying the Dutch 403 Exemption
Research compiled 2026-03-17.