How to Establish a Sole Proprietorship in the Netherlands

Be it a sole proprietorship in the Netherlands (eenmanszaak), a private limited company (bv), a Commercial partnership (vof), a Public partnership (maatschap), or even a Cooperative, businesses are open to choosing any legal structure. 

The choice between the various legal structures for businesses in the Netherlands has everything to do with taxes, liability, and the ability for market borrowing.   

Eenmanszaak, in Dutch, refers to a legal structure without an independent legal identity. It is common business parlance for a sole trader or sole proprietors in the Netherlands. 

Many entrepreneurs register as the eenmanszaak to quickly start a business with minimum to zero legal compliance and tax incentives. Their decision favors a steady rise in registered sole proprietorships in the Netherlands beyond 1.4 billion and counting. 

Business owners looking to start a sole proprietorship in the Netherlands must first understand the nuances of the eenmanszaak. 

Eenmanszaak, or a sole proprietorship in the Netherlands, is a business whose profits and liabilities belong to a single owner. A sole proprietor enjoys the flexibility to operate under various trade names, engage in various commercial activities, and work from multiple premises. However, they can only register and set up one sole proprietorship in the Netherlands. 

Anyone outside the EU/EEA or Switzerland can also register a sole proprietorship in the Netherlands, provided they have a startup visa or residence permit. There is no restriction to any field where the sole trader is used. Most freelancers and ZZP’ers (zelfstandigen zonder personeel) in the Netherlands register with the Netherlands Chamber of Commerce KVK (Kamer van Koophandel) as sole traders.

Quick and easy incorporation of sole proprietorship in the Netherlands offers multiple benefits to individual business owners.

• Convenient setup: There is no minimum capital requirement for setting up a sole proprietorship in the Netherlands.
• Minimum tax liability: If a sole proprietor meets the necessary criterion set by the Dutch Tax and Customs Administration to qualify as a legit business, they can avail of tax benefits. For instance, in 2022, self-employed entrepreneurs can avail of income tax deductions of up to € 6,310. The government does not impose VAT on sole trader businesses with a turnover of less than EUR 20,000 a year. 
• Less accounting compliance: Even though sole traders must maintain proper financial records, filing the annual account with the KVK, the Dutch Chamber of Commerce is not compulsory.
• Flexible business structure: The business owner enjoys full authority to sign legal contracts, conduct legal operations, or give someone power of attorney. 
• Safe exit option: Sole proprietorships in the Netherlands have the immunity to save their partner from bankruptcy by signing a registered partner agreement or pre-nuptial agreement. If you wish to dissolve your business, you can deregister with the KVK and settle the requisite claims with the Tax Administration.

DigiD

It is a digital version of your identity document to access any government services in the Netherlands.

Business name

A proper trade name is necessary to register your business with KVK and get listed in the Business Register or Handelsregister.

Business address

The Chamber of Commerce takes a sole trader’s private address from the municipal personal records database (Gemeentelijke Basisadministratie, GBA). 

Dutch business premise lease contract

You must submit a purchase or lease contract if your sole trader business address differs from your private address. It is called zakenadres. For instance, it could be your bookkeeper’s address.

Employers should consider the following things when registering as self-employed in the Netherlands.

• Explore the regulations and permits needed for all professional services, whether it’s a tech company, a creative agency, or a legal firm. For businesses in the Amsterdam Area, these vary by sector.
• It is wise to register a trademark or apply for a patent if innovation is integral to the business. 
• The Netherlands offers additional subsidies and tax incentives to support innovative projects, energy transition, or other sustainability initiatives.
• As a sole proprietor in the Netherlands, a basic understanding of Dutch labor law provisions, such as contracts, notice periods and dismissal, social security, CAOs, holiday pay, and other employee entitlements, will make hiring easy. 

A sole trader business in the Netherlands must be registered with the Netherlands Chamber of Commerce KVK and get listed in the Dutch Business Register (Handelsregister). 

The essential steps to registering a sole proprietorship in the Netherlands include: 

Pre-register online

• There is an exclusive option to pre-register your sole proprietorship online using DigiD. 
• Fill out the online form using your details, business contact details, and a company description.

Registration cost

• You will be charged a one-off fee from the Netherlands Chamber of Commerce KVK for registering your company in the Dutch Business Register (Handelsregister). 
• You can only pay digitally using your mobile, debit, or credit card. No cash payment is allowed. 

Physical verification

• You must visit a KVK office to incorporate sole proprietorship in the Netherlands. 

Tax registration 

• Once your sole proprietorship in the Netherlands is registered, the Dutch Tax and Customs Administration (Belastingdienst) will automatically issue BTW-id (VAT identification number) to eligible entrepreneurs under eenmanszaak for correspondence.

Setting up a bank account

• The best practice for sole traders is to create a separate bank account for a sole proprietorship in the Netherlands to diversify between personal and business expenses.

Many businesses start either as a sole proprietorship or private limited company. When businesses book higher profits, the tax burden on a bv (private limited company) is less than an eenmanszaak. While turnover or profit margin decreases, the tax burden on a sole proprietorship is significantly less. Also, the cost of operations remains high. 

Sole proprietorships in the Netherlands are a perfect option for individuals who want complete control over their business with minimum liability and risks. Plus, sole traders can also scale their business with time by hiring employees. However, recruiting employees brings the challenges of payroll and team management.

Partnering with a global employment solution like Multiplier is an excellent way to mitigate these issues. Our experts can help sole proprietors onboard and pay employees in the Netherlands.

Multiplier has a local presence in over 150+ countries. Our in-house team is well-aware of the rules and compliances required for business entities. With our one-click payroll service, you can pay your international employees and freelancers.