Starting your own business or going freelance in the Netherlands requires careful consideration of your tax structure. The structure you choose can significantly impact your business and its finances. TaxSight has created this guide to help you understand the different business structures, so you can choose the one that best suits your needs.
Understanding business structures in the Netherlands
In the Netherlands, there are several common business structures, each with different tax implications:
- Sole proprietorship (Eenmanszaak)
- Limited liability company (BV), which may make you eligible for the 30% tax ruling
Sole proprietorship: a simple business structure
A sole proprietorship (eenmanszaak) is a straightforward business structure where the business is tied directly to the owner. As the owner, you are personally liable for the company’s obligations, including taxes. The profit from the business is reported on your personal income tax return, after deducting expenses.
Tax advantages for sole proprietorships
As a sole proprietor, you may be eligible for certain tax credits, such as:
- Profit exemption (MKB-winstvrijstelling): a deduction of 12.7% of your gross profit (as of 2025), applicable if your income falls within the lower tax bracket of 37.48%.
- Self-employed person deduction: the deduction for self-employed individuals is €2,470 (as of 2025), gradually decreasing until it reaches €900 in 2027.
- Starter’s deduction: if you’re new to the business, you can claim a €2,123 deduction for the first three years of your sole proprietorship.
To qualify for these deductions, you must work at least 1,225 hours in your business annually, including time spent on activities like administration and market research.
VAT registration for sole proprietors
When you register as a sole proprietor, you will typically be automatically enrolled in the VAT system, requiring quarterly VAT filings.
Limited liability company (BV) and the 30% tax ruling
Another option is to operate as a limited liability company (BV), which is a separate legal entity. This option allows you to pay yourself a salary and may make you eligible for the 30% tax ruling, subject to meeting specific criteria. Operating as a BV has different tax obligations compared to a sole proprietorship.
BV tax obligations
A BV is treated separately from its owner and is required to meet additional filing requirements, including:
- Monthly payroll tax returns
- Quarterly VAT returns
- Annual corporate income tax return
- Filing annual reports with the chamber of commerce
Shareholder salaries in a BV
If you own 5% or more of the shares in a BV, you are required to receive a salary if you perform work for the company. The BV must withhold wage tax on this salary. The minimum salary is determined by the usual wage rules, and for 2024, it must be at least €56,000 gross annually. If the BV does not generate sufficient income or if the work performed is minimal, exceptions may apply.
The 30% tax ruling
To fully benefit from the 30% tax ruling, your salary must be at least €67,000. However, to be eligible for the ruling, you only need to earn €46,660 (as of 2025). The ruling allows you to pay taxes on only 70% of your salary, reducing your tax burden.
Note that the maximum tax-free percentage for the 30% ruling will decrease to 27% by 2027. Employees who received the ruling before 2024 can continue to use it until their eligibility ends.
Maximum tax-free amount for the 30% ruling
The 30% tax ruling applies only up to a maximum salary of €246,000 (as of 2025). Starting in 2026, this maximum will also apply to employees who were already receiving the ruling before 2023.
BV tax r ates in the Netherlands (2025)
The corporate tax rates for a BV are as follows:
- 19% on the first €200,000 of taxable profit
- 8% on profits exceeding €200,000
Dividend taxes in a BV
Once the BV’s profits are taxed, they can be distributed as dividends to the shareholders. The dividend tax is 15%. Additionally, dividends up to €67,804 (as of 2025) are taxed at 9.5% in Box 2 of the shareholder’s personal income tax return, bringing the total tax rate to 24.5%. Dividends exceeding this threshold are taxed at 31% (as of 2025), bringing the combined tax rate for higher dividend payouts to around 44%, assuming the 19% corporate tax rate applies.
If you qualify for the 30% ruling, it may be more advantageous to take an additional salary instead of a dividend to reduce your tax liability.
BV vs. sole proprietorship: which is right for you?
Operating a BV, particularly with the 30% tax ruling, can be a beneficial option for those who expect their business to grow. It offers more flexibility in terms of salary payments and dividends, and it can help limit personal liability. However, setting up and managing a BV comes with additional requirements and costs compared to a sole proprietorship.
For entrepreneurs expecting steady income and business growth, a BV may be the better option. It’s especially useful if you plan to hire employees or scale your operations.
Getting started with a BV and the 30% ruling
If you’re planning to start a business in the Netherlands, consider setting up a BV and applying for the 30% ruling, if applicable. This can offer significant tax advantages. Whether you’re moving to the Netherlands to start your business or transitioning from regular employment to your own business, it’s essential to take the necessary steps early to optimize your tax position.
Need expert tax advice?
Are you considering starting a business or transitioning to self-employment in the Netherlands? TaxSight specializes in both local and international tax matters, and we are here to help. Contact us today at +31 (20) 261 3221 or email info@taxsight.nl for expert advice tailored to your needs.
