Sole trader or private limited company (BV): which is more advantageous?
Start as a sole trader or set up a BV (private limited company)? We compare tax burden, liability, costs and paperwork. With a calculation example.
Sole trader or BV: what is the difference?
A sole trader (eenmanszaak) is the simplest legal form for entrepreneurs in the Netherlands: you register with the KvK (Chamber of Commerce) and can start immediately. You pay income tax on your profit and are entitled to the self-employed deduction (zelfstandigenaftrek) and the SME profit exemption. The disadvantage is that you are personally liable with your private assets. A BV (besloten vennootschap — private limited company) is a separate legal entity: only the BV is liable, not you personally. You pay corporate income tax (19% up to € 200,000) and additionally income tax in box 2 upon dividend distribution. The rule of thumb: with a profit below € 100,000 per year the sole trader is usually more advantageous; above that it shifts towards the BV. The choice also depends on liability risk, growth plans and whether you want to attract investors.
The sole trader
Advantages
- Easy to set up — registration with the KvK is sufficient
- Low costs — no notary, no starting capital required
- Tax benefits — self-employed deduction (zelfstandigenaftrek) (€ 1,200 in 2026), starter's deduction, SME profit exemption (12.7%)
- Simple bookkeeping — no annual report required
Disadvantages
- Personal liability — you are liable with your private assets
- Higher tax burden at high profits — income tax can rise to 49.5%
The BV (private limited company)
Advantages
- Limited liability — only the BV is liable, not you personally (with exceptions)
- Lower tax at high profits — corporate income tax is 19% up to € 200,000 and 25.8% above that
- Professional image — some clients prefer a BV
Disadvantages
- Higher setup costs — notary (€ 500–1,000), registration, possibly advisory fees
- More complex bookkeeping — annual report required, payroll for the director-major shareholder (DGA)
- Double taxation — corporate income tax + income tax on dividends
When does a BV pay off?
The classic rule of thumb: the tipping point is around € 100,000 profit per year. But this depends on your personal situation (tax credits, health insurance contributions, starter's deduction).
Calculation example: € 100,000 profit (2026)
Sole trader:
- Profit: € 100,000
- Self-employed deduction: -€ 1,200
- SME profit exemption (12.7%): -€ 12,528
- Taxable income: € 86,272
- Income tax box 1: approx. -€ 32,600
- Health insurance contribution: approx. -€ 3,950
- Employment tax credit: +€ 1,900
- Rate adjustment deductions: -€ 1,875
- Net: approx. € 65,750
BV (with customary salary € 56,000):
- Corporate income tax on € 44,000: -€ 8,360
- Dividend tax (24.5% box 2 on € 35,640): -€ 8,730
- Payroll tax on director-major shareholder salary: -€ 20,350
- Health insurance contribution DGA: -€ 2,950
- Employment tax credit: +€ 4,760
- Net dividend distribution: +€ 26,910
- Net: approx. € 64,400
At € 100,000 profit the difference is minimal (approx. € 1,350 in favour of the sole trader). Are you a starter? Then the starter's deduction (€ 2,123) comes on top of that. Above € 100,000 it shifts towards the BV.
Other considerations
- Investors often require a BV
- Liability risk — do you work in a high-risk sector?
- Multiple owners — a BV is useful for partnerships
- Business transfer — a BV is easier to transfer
Switching from sole trader to BV
You can always set up a BV later and "contribute" your sole tradership to it. This can be done tax-neutrally (silent contribution) or with settlement. Seek advice from a tax specialist.