BV or sole proprietorship: which suits you?

Before you incorporate a BV (Dutch private limited company), it is wise to first confirm that a BV is the right legal form for you. In many cases a sole proprietorship (eenmanszaak) is more tax-efficient, until you reach a certain turnover or start taking on risks you don't want to carry personally.

The short answer

A sole proprietorship is usually the smartest choice in the first years: simple, tax-friendly thanks to the self-employed deduction (zelfstandigenaftrek), and you keep 100% control. A BV becomes more attractive once your profit exceeds ~€70,000 a year, or once you want to bring co-founders or investors on board.

Liability

With a sole proprietorship you are personally liable for the business's debts. With a BV that is, in principle, not the case: the BV is a separate legal entity. For activities with substantial risks (construction, supplying large parties, long contracts), that protection quickly carries a lot of weight.

Tax

Sole proprietorship: you pay income tax on the profit, but you get the self-employed deduction and the SME profit exemption (MKB-winstvrijstelling), which works out very favourably up to ~€25,000 profit. BV: corporate income tax (vennootschapsbelasting) on the profit (19% up to €200,000, 25.8% above that), plus box 2 tax on dividends paid out.

Investors and shares

A sole proprietorship has no shares. If you want to give co-founders or outside investors a stake, you need a BV. As soon as you are seriously thinking about an investment round, an option plan or an exit: BV.