Starting a business as a sole proprietor (Eenmanszaak, in Dutch) in the Netherlands is a popular choice for freelancers, expats and solopreneurs.
There is an overload of information that may make the process somewhat tricky to navigate, and if you don’t speak Dutch it can be overwhelming. Fortunately for expats of all kinds, thousands have done so before you––and they’ve never looked back!
This guide covers everything you need to know to establish your sole proprietorship, from registration requirements and legal obligations to taxes and insurance considerations.
What is a Sole Proprietorship in the Netherlands?
A sole proprietorship in Dutch is known as an Eenmanszaak. It’s a straightforward and flexible business structure in the Netherlands, designed for individuals who want to operate their own business. This type of business does not have a separate legal identity from its owner, meaning that you, as the sole proprietor, are fully responsible for your business’ profits and liabilities.
Sole proprietorships are ideal for freelancers and solopreneurs looking for a simple structure without complex administrative requirements. But this simplicity comes with full personal liability, meaning that your personal assets may be at risk if the business incurs debts.
Key differences between a Sole Proprietorship and a Private Limited Company (BV)
When setting up a business in the Netherlands, it’s essential to understand the key differences between a sole proprietorship and a private limited company (BV):
- Legal liability: Sole proprietors have unlimited personal liability for business debts, while in a BV, liability is limited to the assets within the company.
- Setup complexity: Registering a sole proprietorship is simpler and less costly, while a BV involves more complex registration and a higher administrative burden.
- Taxes: Sole proprietors are taxed at individual income tax rates, while BVs are subject to corporate tax rates.
- Ownership structure: Sole proprietorships have a single owner, while a BV can have multiple shareholders.
Requirements for setting up a Sole Proprietorship in the Netherlands
To register a sole proprietorship in the Netherlands, you need to meet the following requirements:
- Residency or work permit: You must either be a Dutch resident or hold a valid work permit if you are a non-EU/EEA citizen.
- Unique business name: Choose a unique and appropriate name for your business that does not resemble an existing registered entity.
- Clear business activity: Define the nature of your business activities, as you’ll need to provide this information during registration.
Understanding these requirements will ensure you have a smooth registration process and help you to establish a compliant business from the start.
Required documents for registering a Sole Proprietorship in the Netherlands
Having the right documents ready is crucial when registering your business. Before you begin registering, it’s important to have these in order, so as not to cause any delays or unnecessary rejections during the application process. Here’s a list of what you’ll need:
- Valid identification: A valid passport or EU ID card.
- Proof of address: Your Dutch residential address or work address (if applicable).
- Business details: Information about your business activities, business name and contact information.
- Other: If your business has a physical location, you may need rental or lease agreements.
Having these documents on hand will help speed up the registration process and ensure you’re registered expediently.
5 steps to register your Sole Proprietorship in the Netherlands
The registration process for a sole proprietorship in the Netherlands is handled by the Dutch Chamber of Commerce (KVK). If you have everything in order, these 5 simple steps should get you through the registration process:
- Book an appointment with the KVK: Visit the KVK website to book an appointment for registering your business. Here's a direct link. Remember, you must have a DigiD issued from the Dutch authorities to be able to book. Read more here.
- Complete their registration form: Prepare all necessary details about your business, including your business name, activities and personal information.
- Visit the KVK office: Attend your appointment in person with all required documents. During this meeting, you’ll review and finalise your application.
- Pay the registration fee: The one-time registration fee for setting up a sole proprietorship is approximately €80,10.
- Receive Your KVK and VAT numbers: Once registered, you’ll receive a KVK number and (in most cases) a VAT number, which enables you to start operating your business legally.
Legal obligations for Sole Proprietors in the Netherlands
As a sole proprietor, it’s important to understand your legal responsibilities. Here’s a brief overview that should help you remain compliant from start-to-finish:
1. VAT registration and filing
- Most sole proprietors need a VAT number to charge and collect VAT on goods and services. You’re generally required to file VAT returns quarterly.
2. Income tax
- Sole proprietors are taxed at personal income tax rates, and you’ll need to submit annual tax returns to the Belastingdienst (Dutch Tax and Customs Administration). Familiarize yourself with available deductions for entrepreneurs, such as the self-employment allowance (Zelfstandigenaftrek).
3. Liability and insurance
- As a sole proprietor, you are personally liable for any business debts. To mitigate risks, consider professional liability insurance, health insurance and other business-related policies.
4. Bookkeeping and accounting
- Proper bookkeeping is essential. You’ll need to keep track of business expenses, VAT, and income, and you may be required to retain records for up to seven years. We recommend an online accountant service with local tax experts––like Xolo!
5. Compliance with local regulations
- Some business types may have additional permits or compliance requirements depending on their industry. Check with the KVK or local authorities to ensure you meet all industry standards.
Key considerations: VAT, taxes, liability, and insurance
Starting and running a sole proprietorship involves understanding various aspects of tax and liability:
- VAT (Value Added Tax): Charged on goods and services at standard (21%), reduced (9%) or exempt rates. Make sure to collect, report and pay VAT on a quarterly basis.
- Income tax and deductions: Self-employed individuals may qualify for deductions, which can reduce taxable income.
- Liability: As a sole proprietor, personal assets are not separated from business liabilities. Investing in insurance is advisable.
- Insurance contributions: Health insurance is mandatory in the Netherlands, and additional insurance for business operations is highly recommended.
Launch and run your business with Xolo––the easy way!
Establishing a sole proprietorship in the Netherlands is an exciting opportunity for entrepreneurs, but its administrative steps can feel overwhelming. With Xolo, you gain access to a streamlined solution for registration, tax filings, VAT and invoicing.
From VAT registration to accounting tools, Xolo is designed to make running your business easier, so you can focus on what matters most: Growth!
If you’re ready to start your business journey, explore Xolo’s support for freelancers and solo entrepreneurs in the Netherlands.