Choosing between a sole proprietorship (eenmanszaak) or a BV in the Netherlands is often reduced to one rule of thumb: once your profit passes roughly €100,000, the BV becomes the smarter structure. That rule is too simple, and it is especially unhelpful if you are new to the Dutch system and trying to make this call before you have even registered a business. Which structure actually works out better depends on a combination of factors, and profit is only one of them. Below are the factors that matter, with a worked example using real numbers.
Sole proprietorship or BV, side by side
| Sole proprietorship | BV | |
|---|---|---|
| Tax on profit | Personal income tax (box 1), up to 49.5% | Corporate tax: 19% up to €200,000, 25.8% above |
| Taking money out personally | Freely, no separate step | Via salary (mandatory minimum director's salary) or dividend (box 2) |
| Liability | Personal, with your entire personal assets | In principle limited to the company's assets |
| Bookkeeping and filings | Simpler, no annual accounts required | Annual accounts, corporate tax return, payroll administration as director |
| Setup and running costs | Low | Notary and Chamber of Commerce fee once, higher yearly bookkeeping costs after |
The factors that actually matter
Deciding on a BV is, in practice, an addition of the points below, not a single answer to "what is my profit."
- How high and how stable your profit is. A high profit only helps inside a BV if you genuinely need less of it personally than you earn.
- How much you need to take out for personal living costs. If you pull out nearly everything you earn to live on, a large part of a BV's tax advantage disappears.
- The mandatory director's salary. As a director-shareholder (dga) of your own BV, you must pay yourself a market-rate salary, set at a minimum of €58,000 for 2026. That amount is taxed at the normal personal income tax rates regardless of your company's profit.
- Whether profit stays inside the company or gets paid out. This is usually the factor that tips the comparison, see the worked example below.
- Risk and liability. If you work with large contracts, suppliers, or employees, limited liability weighs more heavily than it does for a small, low-risk practice.
- Financing and contracts. Some clients, banks, or leasing companies prefer working with a BV over a sole proprietorship.
- Pension and disability cover. As a director you build up pension differently than as a sole proprietor, and you are not automatically covered the way a sole proprietorship is.
- Staff and growth plans. If you plan to hire several employees, a BV generally scales more smoothly than a sole proprietorship.
- Cost and administrative load. A BV costs money to run: a one-off notary fee and Chamber of Commerce registration, plus recurring yearly costs for annual accounts, a corporate tax return, and usually more involved bookkeeping than a sole proprietorship needs.
- Plans to stop or sell the business. A BV is generally easier to transfer or sell than a sole proprietorship.
- The Dutch self-employed tax deduction shrinking every year. This deduction (zelfstandigenaftrek) drops from €1,200 in 2026 to €900 in 2027, which gradually reduces how much a sole proprietorship can deduct. We covered the wider 2027 tax plan changes in our article on how the sole-proprietorship-vs-BV tipping point is shifting.
Worked example: €150,000 profit
Say your profit as a sole proprietorship is €150,000. Here is how the two routes compare.
As a sole proprietorship: After the self-employed deduction (€1,200) and the 12.7% SME profit exemption, €129,902 remains taxable. Under the Dutch 2026 income tax brackets, that comes to roughly €54,234 in income tax. Before tax credits and the income-based health insurance contribution, you keep around €95,766.
As a BV, with a €58,000 director's salary and everything paid out as dividend: After the salary, your BV has €92,000 left. Corporate tax at 19% takes €17,480, leaving €74,520. Pay that out in full as dividend, and box 2 tax at 24.5% takes €18,257, leaving a net €56,263. Combined with a net salary of roughly €36,919, you end up with around €93,182 in hand.
At this profit level, the two routes land almost identically if you take everything out. The real advantage of a BV only shows up once you leave part of that €74,520 inside the company: that money is then only taxed at 19% corporate tax, not also at box 2 rates, until you eventually decide to pay it out. If you plan to build a buffer or reinvest profit rather than spend it, the BV becomes genuinely more attractive. If you need to take everything out to live on, the difference with a sole proprietorship is small to none at this level.
What a BV actually protects you from, and what it doesn't
A BV limits your liability in principle to the company's assets, but that is not a blanket shield. As a director you remain personally liable for mismanagement, and the Dutch tax authority can hold a director personally liable for unpaid tax and social security debts in some cases. If a bank or leasing company asks for a personal guarantee, you are still on the hook with your personal assets regardless of your legal structure. For the risk of losing income to illness, insurance is often a more direct and cheaper fix than the legal structure itself.
Do you need a holding structure right away?
Not automatically. A holding structure, where a personal holding company sits above your operating company, mainly makes sense once you consistently leave profit inside the company to invest or to separate risk. For a newly started BV that needs most of its profit for living costs, a holding is often unnecessary extra administration and cost. When dividends move between your own companies rather than out to you personally, a withholding exemption often applies, something your bookkeeper can confirm applies to your specific group structure before you set one up.
Frequently asked questions
So is there really no rule of thumb left at all? Not a hard line that works for everyone. At a low, unstable profit, a sole proprietorship is almost always simpler and cheaper. At a high, stable profit that mostly stays inside the company, the BV usually wins. Everything in between depends on the factors above, for your specific situation.
Can I switch from a sole proprietorship to a BV later? Yes, and Dutch law has specific routes for that conversion that also affect how your annual accounts look afterward, covered in our comparison of annual accounts for a sole proprietorship versus a BV.
Do I always have to pay out the full €58,000 director's salary? In most cases yes, though exceptions exist if your company just started or your profit doesn't yet support it. The standard amount is the legal starting point the Dutch tax authority applies.
New to setting up a company in the Netherlands?
At Sophy &Co. we help expat founders work through exactly this kind of decision long before any paperwork gets filed, based on your actual profit and plans rather than a rule of thumb. Book a call and we'll talk you through what a sole proprietorship or BV would mean for your specific situation, no Dutch required, and connect you with trusted notaries, banks, and other expat founders who have made the same call if that's useful.
Our team speaks English, Dutch, Italian, Chinese, Spanish, Papiamento, German, and a bit of French and Polish between us, so you can explain your situation however it comes out easiest. We're a woman-led, diverse team of bookkeepers, both women and men, and proudly LGBTQIA-friendly.
Want a first indication before booking that call? Our sole proprietorship or BV checker gives a quick read based on your profit and plans, and our director's salary checker shows what a market-rate salary would mean for you. Take a look at our services and pricing, see how it works, or get in touch for a no-obligation conversation.
For the official rules, see the Dutch Tax Administration's pages on corporate tax and the director's minimum salary rule, or the Chamber of Commerce's general comparison of both structures.