Sole trader or BV: when is switching advantageous?
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
For tax a BV only becomes attractive from roughly € 100,000 to € 130,000 of annual profit, because as a director you must pay yourself at least € 58,000 and the sole trader keeps the entrepreneur deductions.
- The BV pays 19% corporate tax up to € 200,000 of profit and 25.8% above that, plus box 2 tax once you distribute dividend.
- The sole trader keeps the self-employed deduction and the 12.7% SME exemption; both lapse once you become a director-shareholder.
- Liability often outweighs tax: with a sole trader your private assets stand behind business debts.
- A BV costs extra every year: payroll, annual accounts with filing, and a corporate tax return.
When you start as an entrepreneur, you usually begin with a sole trader business; freelancer is not a legal form but a way of working. As your business grows, the question eventually arises: should I switch to a BV? That's not a simple yes or no. It depends mainly on your profit, but also on liability and your plans. This article explains what to look out for.
What's the difference between a sole trader and a BV?
With a sole trader business, you and your company are the same for tax purposes. You pay income tax on the profit and benefit from deductions such as the self-employed deduction and SME profit exemption. With a BV, your company is a separate legal entity. The BV pays corporate tax on the profit, and you as director-major shareholder receive a salary and possibly dividend, which is taxed in box 2.
From what profit does a BV become interesting?
As a rule of thumb, a BV only becomes interesting for tax purposes from a profit of around 100,000 to 130,000 euros per year. Below that level the sole trader's deductions are often more advantageous. Moreover, as a DGA you must pay yourself a customary salary of at least 58,000 euros, which at lower profits leaves little room for the favourable corporate tax rate.
What role does liability play?
Besides tax, liability plays a role. With a sole trader business you're liable with your private assets for your company's debts. With a BV that's in principle separated: the BV is liable, not you personally. If you run larger risks in your work, a BV can be attractive for that reason, even at a lower profit.
What's involved in switching?
Setting up a BV goes via the notary and involves incorporation and annual costs, such as a mandatory annual report. You can transfer your sole trader business into the BV tax-neutrally or with settlement; which route is most favourable for tax differs per situation. So always calculate the switch carefully in advance.
How do you make the right choice?
The choice between sole trader and BV is not a snapshot, but something to review periodically as your business grows. A good bookkeeper calculates both scenarios for you based on your current figures and plans, so you don't switch too early or too late.
The comparison in numbers
For tax, the choice is between two systems. The sole trader pays income tax on the whole profit but gets the entrepreneur deductions and SME exemption. The BV pays corporate tax first and box 2 on distribution, but obliges you to take a box 1 DGA salary.
| Sole trader | BV | |
|---|---|---|
| Tax on profit | Box 1, up to 49.5% | Corporate tax 19/25.8% plus box 2 on distribution |
| Deductions and exemptions | Self-employed deduction and 12.7% SME exemption | None; salary costs deductible in the BV |
| Mandatory salary | No | Yes, customary salary at the € 58,000 standard |
| Liability | Private, with all your assets | Limited to the BV, bar exceptions |
| Costs and administration | Light | Notary, filing accounts, payroll |
You can always switch later
Converting a sole trader business into a BV can be done tax-neutrally or with settlement, each with its own conditions and deadlines. Starting small, beginning as a sole trader is almost always sensible: you benefit from the deductions and keep costs low. If profit grows structurally, have the tipping point calculated annually; see also corporate tax and customary salary.
Frequently asked questions
From what profit is a BV more advantageous?
Roughly from 100,000 to 130,000 euros of profit, depending on how much you distribute privately. Below that level the sole trader's deductions almost always win. Include the fixed costs of a company; they are listed in setting up a company: steps and costs.
Does a BV really protect my private assets?
In principle yes: creditors can only pursue the BV. Exceptions are mismanagement, personal guarantees and unreported inability to pay. Banks moreover often ask small BVs for private co-signatures.
What does a BV cost extra per year?
Count on a few hundred to over a thousand euros extra: payroll for your DGA salary, fuller annual accounts with filing, and a corporate tax return. Plus one-off notary fees at incorporation.
Must I pay myself a salary in a BV?
Yes, the customary salary: in 2026 at least the highest of 58,000 euros, comparable-role pay or your best-paid employee's wage. That quickly makes the BV unattractive at lower profits.
Can I convert my sole trader business into a BV later?
Yes, tax-neutrally (no settlement, with conditions and retroactivity to 1 January) or with settlement over hidden reserves. Have it guided, as the deadlines are strict.
What happens to the self-employed deduction with a BV?
It lapses: as a DGA you are no longer an income tax entrepreneur. The SME exemption lapses too. In return, BV profit is taxed at 19 per cent corporate tax as long as you do not distribute.
Sources
- Corporate tax rates 2026Belastingdienst · belastingdienst.nl
- Customary salary for the director-shareholder in 2026Belastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
