In this article we explain how you can start a sole proprietorship in The Netherlands, without involving a formation agent, lawyer or accountant.
Anybody can register a sole proprietorship (‘eenmanszaak’),and it’s not even necessary to be resident in The Netherlands. The process is straightforward, and does not require the drafting of statutory documents.
In order to register a sole proprietorship, it’s required to submit an application to the Chamber of Commerce (Kamer van Koophandel). You can prepare the application online but will have to visit the Chamber of Commerce personally, to finalize the registration and obtain your company number.
Here you find the timeline as mentioned on kvk.nl (official Chamber of Commerce):
A sole proprietorship is a form of enterprise, just like the VOF or a BV. In the sole proprietorship there is, as the word says, a person the owner. The sole proprietorship has no legal personality. The owner is therefore liable for all debts and from a tax perspective, the result is added to the entrepreneur's income.
You can establish a maximum of one sole proprietorship. It can have different trade names, activities and branches.
It is important to describe as accurately and clearly as possible which activities you will carry out with the sole proprietorship.
Try to explain as clearly as possible what exactly you will do with the company and to whom you will deliver your product or service. This allows the Chamber of Commerce to link the correct SBI codes to your company.
Firstly, the sole proprietorship is simple and inexpensive to set up at the Chamber of Commerce without the intervention of a notary. A sole proprietorship is fiscally advantageous due to its various tax deductions. If you meet the condition, you do not have to pay income tax on part of the profit achieved. In addition, the administrative burdens in a sole proprietorship are not as bad as no annual accounts are required. Of course, as an entrepreneur you are obliged to keep proper administration, but that is still less than with the BV.
As a sole trader, it is difficult to raise seed capital, because investors often prefer to invest in a BV. You are also responsible for building up a supplementary pension. A major disadvantage of the sole proprietorship is that you as an entrepreneur are personally liable for any obligations and debts.
In the case of a sole proprietorship, you are 100% personally responsible for the business debts you incur. The law makes no difference between the assets of the company and your private assets. As a result, you always trade at your own risk and expense within this legal form.In the worst case, a creditor can therefore claim, for example, your family home.
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IMPORTANT FACTS
Freelancers or self-employed persons (ZZP) are registered at the Chamber of Commerce as a sole proprietorship. A freelancer or ‘self-employed person’ (ZZP) is not an official legal form.
The owner is always fully authorized to sign. This means that you can sign contracts or perform certain legal acts on behalf of the company. Such as reporting a change in the Trade Register. You can also give a proxy to someone else. That's a statement that this person can also act on behalf of the company. Register this person, the authorized representative, in the Trade Register. This is not mandatory, but it is useful. This way your business partners know for sure who is allowed to act on behalf of the company.
With a sole trader you can hire personnel. The term sole proprietorship says something about the legal form and not about the number of people working in your company. You pay payroll taxes and social contributions for the personnel. If you are hiring an employee for the first time, you must register as an employer with the tax authorities.
Selecting An Address
Yes, a Dutch sole proprietorship requires a local address.
House of Companies can provide you with such registered office address.
Before the registration of the sole proprietorship, you need to consider the following matters:
Your company will require a registered office address in the Netherlands, where company documents will be legally served.
The registered office must contain the statutory documents of the company (although this is not relevant for a sole proprietorship)
In case you are planning to rent your office, even before the registration of the company, you need to include the rental agreement of the office in your application, so that the Chamber of Commerce can register the company on the correct address right away.
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Appointing Directors
A Dutch sole proprietorship has no board of director, or even shareholders.
The ‘owner’ of the sole proprietorship is considered fully authorised to operate his business.
In that sense, the sole proprietorship is not a legal entity, and has no distinctions between board members or shareholders. The ‘eenmanszaak’ is considered a ‘business registration’ for an individual, and the profits of this business will be taxed as individual profits (in a similar manner, as salaries would be taxed in Box I).
In the sole proprietorship, the owner is not paid any salary. Any profits in the company, can be allocated to him at any time, and will be taxed once a year in his annual income tax return.
Instead of appointing a director, it’s possible to appoint a representative via Power of Attorney. This Power of Attorney can also be made public via the Chamber of Commerce.
Choosing a Company Name
When you start a sole proprietorship in the Netherlands, you need to come up with a nice company name. International names are quit common, due to the many international companies in the Netherlands. There are some company name restrictions that you need to consider, which are described in this article.
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The costs of setting up a sole proprietorship
The Chamber of Commerce charges administration costs for registering your sole proprietorship. As a result, you will receive a one-time invoice of € 50 for registration. These costs are not included in the founding price of a formation agent or a notary (who could be requested to assist). You will receive the invoice after the sole proprietorship has been registered by the Chamber of Commerce.
For € 15 you can immediately take an extract.
You can pay with debit or credit card. Cash is not possible.
In case you involve a formation agent, you should consider a budget of around 750 EUR for their assistance. They might inform you on the matters which are discussed in this email, and might suggest to involve an accountant to make a tax calculation on your expected profits. See more about the taxes for the sole proprietorship below.
Administration & Tax Requirements
As an entrepreneur in a sole proprietorship you have to deal with different taxes. When you make a profit you pay income tax and you also have to take into account turnover tax. If you employ personnel, you also have to take payroll taxes into account.
You are legally obliged to keep records for your sole proprietorship. Accounting is an important part of this. From this follows annual accounts that give you the annual overview of the financial position of your sole proprietorship. For example, have all bills been paid? And what costs have you incurred for your company. The annual accounts form the basis of your tax returns. Your administration must also meet a number of requirements. You do not have to submit (deposit) the annual accounts to the Chamber of Commerce.
If you are a non-resident, operating a sole proprietorship, you might not be taxable in the Netherlands, based on your country of resident (and the actual operations of your business). In such case, you might have to declare your profits in your country of residence instead.
In case your sole proprietorship has no aim to make any profits, your activities might no longer be considered as an enterprise, and you would no longer be required to submit a tax return as entrepreneur. For example, if you sell less than 3 cars per year,you are not considered a car dealer. And the profits on such sales would be exempt from any taxes. The same applies for any income on hobbies, or goods or services that you provide (solely) to family.
When you are a Dutch entrepreneur, you will have to file the annual income tax return. This can be filed online, via your E-herkenning, or via an accountant.
In your tax return you declare your profits. In addition, you can mention the income and deductible items that you have as a private person, such as mortgage interest, maintenance and the like.
Other relevant topics in your tax return could be:
Here you can read more about:
As a sole proprietorship, you are entitled to certain ‘startup’ tax incentives. These tax incentives result to a relative low tax rate, for sole proprietorships with a relative low profit (up to 30.000 EUR). The following tax incentives for startups could be applicable :
Self-employed person's allowance: this was a fixed amount between 2012 and 2019, but this deduction will decrease annually between 2020 and 2028.
Starter deduction : an increase in the self-employed person's allowance of € 2,123 (2018) especially for start-up entrepreneurs (first three years).
Research and Development work : when an entrepreneur spends at least 500 hours on research and development work (approved by NL Agency), he is eligible for the R&D scheme.
Cooperation deduction : if the partner of the entrepreneur cooperates unpaid in the company, the cooperation deduction can be used. The amount depends on the profit and the number of hours that the partner cooperates.
Strike deduction : if the company is discontinued, the strike deduction can be used. This may be deducted from the profit made on the discontinuation of the company.
Investment deduction: A company that invests in business assets can sometimes deduct part of the profit. This can take the form of the Small-scale Investment Allowance (KIA) and an environmental investment allowance.
SME profit exemption : No tax is payable on a fixed percentage of the profit, in 2019 this is 14%. However, the other deductible items must first be deducted from the profit.
House of companies is currently working on a full Tax Filing tutorial for Sole Proprietorships in The Netherlands, which will also fully explain if you meet the requirements for the tax incentives above. In any case, you should consider that you must:
be considered a resident in the Netherlands
work at least 1225 hours per year in the Sole Proprietorship
in some cases; not have used the incentive already (for multiple year)
If you stop your sole proprietorship, you must deregister your case at the Chamber of Commerce. You also have to pay tax with the tax authorities. If your company has become more valuable over time, you will pay strike profits.
Start the registration process of your sole proprietorship
You have to consider the following steps, to register your sole proprietorship in the Netherlands :
If you cannot continue with DigiD, register via another form.
DigiD is an government account for individual users. As a non-resident you might have access to this yet.
2. Consider the Forms Checklist
Once you are logged into the Digi-D portal, you can use the Checklist to confirm which documents and forms you need for the application. You can also follow all the steps of the House of Companies tutorial to register your Sole Propertitership.
3. Complete the registration form
Step by step fill in all parts of the digital registration form. Using House of Companies Tutorial you can easily navigate through the form, and complete all questions.
4. Check your data
Check the overview of all data you have entered. A correctly completed form is required to make an appointment and register your company.
5. Make an appointment
If you have filled in the registration form 100%, you can immediately make an appointment at a Chamber of Commerce of your choice.
During your appointment, a Chamber of Commerce employee will check your ID and check whether you meet the registration conditions.
Continue with the registration of your Sole Proprietorship in The Netherlands, using our Tutorial Presentation.
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