Every freelancer’s journey in the Netherlands starts with a rather crucial decision early on.

Selecting the appropriate business structure for your business will put you on the right path, but knowing the differences between a sole-proprietorship (ZZP’er) and a BV (Besloten Vennootschap or Private Limited Company) can require a bit of research and business acumen.

Each structure comes with its own set of benefits, requirements and responsibilities. This article will help you compare both options, and choose the structure that meets your individual needs.

Pros and Cons: The differences between BVs and ZZPs

Self-employed individuals and small businesses are flooding into the Netherlands. This is often thanks to the ease of doing business, fair taxation and treatment of foreigners who come to grow their ideas. 

While other corporate structures exist, ZZP’ers and BV-style business structures are most common with freelancers and young ventures. The simplicity of ZZP (or eenmanszaak) is a common choice among solopreneurs, while BVs are designed around higher risk levels and multi-employee structures.

A quick look at both will show us the upfront pros and cons. 

The advantages of Dutch ZZPs for freelancers

A ZZP (Zelfstandige Zonder Personeel) translates to "self-employed without employees." It’s essentially a sole proprietorship—the simplest and most common legal structure for freelancers and solo entrepreneurs in the Netherlands. 

If you’re starting small, working independently, and want to minimize administrative hassle, a ZZP is likely the easiest route.

Advantages of Dutch ZZPs:

• Easy and affordable: Registering as a ZZP'er with the KvK (Kamer van Koophandel) is straightforward and relatively inexpensive, typically costing around €75.
• Minimal admin: Compared to other business structures, ZZPs have fewer regulatory requirements and less paperwork to manage.
• Tax benefits: ZZPs can take advantage of specific freelancer deductions, such as the zelfstandigenaftrek (self-employed deduction) and startersaftrek (start-up deduction), which can significantly reduce taxable income. Read all about these and more in our blog about subsidies for freelancers in the Netherlands. 

Disadvantages of Dutch ZZPs:

• Unlimited personal liability: As a ZZP’er, you are personally liable for any business debts or legal issues. This means your personal assets, such as your house or savings, could be at risk.
• Less credibility: Some larger clients or business partners may view a sole proprietorship as less stable or professional compared to an incorporated business. This could make it harder to secure high-value contracts (without a proven track record).

The advantages of a Dutch B.V. for entrepreneurs

A BV is a private limited company—a separate legal entity from you as an individual. It’s often chosen by businesses with higher revenue, greater risk exposure, or one with plans to hire employees and scale operations. Setting up a BV involves more complexity and costs than a ZZP, but it provides greater protection and flexibility.

Advantages of Dutch BVs:

• Limited liability: A BV creates a legal separation between you and your business. Your personal assets are generally protected from business debts and liabilities, reducing financial risk.
• Increased credibility: Operating as a BV signals stability and professionalism. Larger clients and business partners are often more comfortable working with a BV, which can open doors to higher-value contracts.
• Flexible profit distribution: A BV allows you to control how profits are distributed, giving you opportunities to optimize your tax position through dividends and salary adjustments.

Disadvantages of Dutch BVs:

• Higher setup, maintenance costs: Setting up a BV requires a notary and typically costs between €500 and €1,000. There are also ongoing costs for annual financial reporting and compliance.
• Complex administrative obligations: Running a BV involves stricter reporting and accounting requirements, including maintaining official financial records and filing annual reports.

In either case, having a trusted partner like Xolo to help manage your finances and admin work can make these choices less burdensome. Xolo offers ZZP’ers a slew of options for handling their businesses’ unique needs, from tax reporting to invoicing and VAT.

ZZP vs BV: What’s the right choice?

If you’re a solo entrepreneur looking for a simple and cost-effective setup, a ZZP is likely the better fit. However, if you’re scaling your business, taking on higher risks, or working with larger clients, forming a BV might be worth the added complexity for the increased protection and credibility it provides.

Think about your long-term goals, risk tolerance and administrative capacity. Starting as a ZZP and transitioning to a BV as your business grows is a common and strategic path. It’s often wisest to get your feet wet before diving right in.

Let’s recap some of the reasons why choosing a ZZP over a BV, or vice versa, may be ideal

Should I be a ZZP?

Starting out as a ZZP’er in the Netherlands is likely a smart choice. If you’re just beginning your freelance career, and your revenue is likely to be moderate, the simplicity and low-cost structure of a ZZP stands out. 

Your business will likely involve low financial and legal risks if you’re choosing this option. Considering these obligations ahead of time, means keeping your personal assets safer in the long run.

Should I be a B.V.?

Transitioning to a BV (or starting out as one) could become beneficial when you start to grow. Let’s recap some of the previous points, and put them into context:

• Your annual profits exceed approximately €100,000, making tax advantages more significant.
• You need enhanced credibility and formal business structures for significant client relationships or contracts.
• Your business involves higher risks, and protecting your personal assets becomes paramount.

The first best decision you’ll make for your business

Ultimately, the choice between ZZP and BV depends on your business goals, financial projections, risk exposure and administrative preferences. For most freelancers, starting as a ZZP'er is usually the best initial step. It allows flexibility, minimal startup costs, and easy access to tax deductions. As your business grows and evolves, reassessing and potentially switching to a BV might become advantageous.

But you don’t have to huff it alone!

Xolo – simplify your ZZP’er journey in the Netherlands

Xolo’s been around since the birth of e-Residency in Estonia. Our freelancer-first mentality is at the forefront of everything we do, and our goal is to empower more entrepreneurs to create, grow and keep their businesses.

If you’re considering a ZZP business in the Netherlands, our local Xolo Netherlands product and team is ready to provide:

• Seamless registration: Get set up with the KvK hassle-free.
• Automated invoicing & expense tracking: Keep your finances in check with minimal effort.
• Tax filing support: Our local accountants ensure your compliance with Dutch tax regulations.

Simplify your freelance business! Join Xolo today and experience the hassle-free management of your ZZP administration, freeing you to concentrate on what you love to do most!