Five reasons not to start with a BV in the Netherlands

More tax advantages as sole proprietor or partner in a VOF
If an individual or a group of individuals decide to set up a business in the Netherlands (often contemplated by the spouse of an expatriate), we usually advise the start-up that a choice for a limited liability company (hereafter BV) is a lot less tax advantageous than becoming sole proprietor (eenmanszaak) or a (personal) partnership (VOF). Please note that setting up a business, let alone a BV, may in certain cases be impossible from an immigration point of view.
26 nov 2018 Laatst gewijzigd: 16 dec 2018 Kennis mr. Leon van Baal

The five reasons for a sole proprietor (eenmanszaak) or (personal) partnership (VOF)

  1. € 7.280 income profit deduction, if active for at least 1.225 hours per calendar year (zelfstandigenaftrek);
  2. increase of aforementioned deduction for starting entrepreneurs during the first 3 years of € 2.123 (startersaftrek); for R&D activities this deduction is much higher;
  3. starting entrepreneurs may depreciate business assets at will during the first 5 years (willekeurige afschrijving);
  4. additional personal income tax exemption of 14% of profits (MKB-winstvrijstelling);
  5. carry-back term of tax losses is 3 years for private entrepreneurs (BV’s: 1 year).

Tax disadvantages of a BV

A starting BV cannot carry back its initial losses because it does not have any profit history. In case of a sole proprietorship or a partnership the private entrepreneur can carry back its losses to any positive private (wage) income of the past 3 years. Moreover, in a BV a certain market wage is taxed to its main directors/shareholders (sometimes even if the BV is not yet profitable). Based on the above, it is usually better to postpone the BV for a couple of years and to migrate into a BV tax-free when profits exceed say € 150,000.

Still a BV, but with the tax advantages of a sole proprietor

In some cases a BV can otherwise be necessary (limitation of liability, venture capital participation, franchising conditions etc.). In these cases we can investigate if we can combine a BV with a sole proprietorship to achieve the best of both worlds.

Please contact me, if you have any question about your case.

Auteur

Baal_van_Leon_foto.jpg

mr. Leon van Baal

Migrantic, tax & immigration laywers
Den Haag
Specialisme(n): Internationaal belastingrecht, inkomstenbelasting, DGA’s en expats
Profiel
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