Liability
With a sole proprietorship you are personally liable for all business debts. With a BV, in general the company is liable, not you personally. There are exceptions, for example in case of improper management or personal guarantees.
Tax
A sole proprietor pays Dutch income tax on the profit, with specific deductions for entrepreneurs if the conditions are met. A BV pays corporate income tax on its profit. Dividend tax applies when profits are distributed, and as director-shareholder you usually pay yourself a salary. At higher profits a BV is often more attractive, but the break-even point depends on your situation.
Setting up and administration
A sole proprietorship is registered with the Chamber of Commerce without a notary and is cheaper to run. A BV requires a notary, annual accounts that are filed publicly and a corporate income tax return, so the administration is more extensive.
Where you live
If you live outside the Netherlands, where you pay tax depends on where you live and where the work is done. This affects both options, so it is worth checking before you decide.
Our advice
Starting small with low risks? A sole proprietorship can be a good first step. Expecting higher profits, investors, business partners or international customers? Then a BV is usually the better choice. In the intro call we work out which suits you.
