Sole proprietorship or bv in the Netherlands: how to choose

What is the difference between a sole proprietorship and a bv?

A sole proprietorship (eenmanszaak) is you. There is no separate legal person: the profit is your income and the debts are your debts. A bv is its own legal person. The bv earns the money, pays tax and holds its own debts. You are a shareholder and usually also a director, the dga.

How do you pay tax with a sole proprietorship?

Your profit falls in box 1 of income tax. If you meet the hours criterion of 1,225 hours, you get the self-employed deduction of €1,200 and as a starter also the starter deduction. On what is left you still get 12.7% SME profit exemption. After that you pay the normal box 1 rate, which rises as you earn more.

Everything the sole proprietorship earns is taxed in that year. Even if you leave the money in the business account.

How do you pay tax with a bv?

With a bv it goes in three layers:

1. The bv pays you a salary. As dga that must usually be at least €58,000 in 2026 (the usual salary scheme, gebruikelijkloonregeling). The bv withholds payroll tax on that salary, and you pay income tax in box 1.
2. On the profit after your salary the bv pays corporation tax (vennootschapsbelasting): 19% up to €200,000 and 25.8% above that.
3. If the bv pays out dividends, you pay box 2 tax on them: 24.5% up to €68,843 and 31% above that.

If you leave the profit in the bv, for now you only pay corporation tax. Box 2 only comes when you pay the money out. That is one of the reasons a bv becomes interesting when you earn more than you need privately.

Worked example: profit in a bv

Say a bv makes €100,000.00 profit before the dga salary. For simplicity we leave employer charges and pension out.

With a sole proprietorship the same profit would all fall in box 1, but with the self-employed deduction and the SME profit exemption. Which outcome is lower depends on your profit, your other income and what you need privately. Work it out for your own figures, or have an adviser do it.

From which profit is a bv cheaper?

There is no fixed amount for that. The KvK and Ondernemersplein both say: with a low profit, as in the starting phase, you are usually better off with a sole proprietorship. Only once your profit grows well can a bv give a tax benefit. The salary of at least €58,000 that you must pay yourself makes a bv awkward with a lower profit. If you also have a lot of profit left that you do not need privately, the bv becomes more interesting.

Note. Figures going around online about the crossover point are often based on one situation. Use them as a direction, not as the answer.

Are you not liable with a bv?

With a sole proprietorship you stand for the debts of your business with your private assets. Also for damage a client suffers through your work. With a bv in principle only the bv is liable. There are exceptions: if you mismanage as a director, or if you stand surety privately for a loan of the bv, you may still have to pay yourself.

What does a bv cost extra?

• A notary for setting up. The KvK mentions roughly €500 to €1,000.
• Annual accounts that you file with the KvK every year.
• A payroll admin for your own salary, with a monthly payroll tax return.
• A corporation tax return for the bv and an income tax return for yourself.
• Often an accountant, because the rules are more extensive.

For a sole proprietorship a solid basic admin is enough: invoices, receipts, the VAT return and once a year the income tax return. Read how that works in income tax return for freelancers.

Can you still switch later?

Yes. Many entrepreneurs start with a sole proprietorship and convert it to a bv later. That can be done in several ways, sometimes without paying tax right away on the value of your business. Get advice on that: the choice of conversion method has consequences for years.