Self Employed in the Netherlands : BV or Eenmanszaak (“ZZP”)

If you start your work in the Netherlands as a self employed person, you basically have a choice between two company forms: the BV or the ZZP (or "eenmanszaak"). In this article we will explain the basic differences between these two company forms. In short, the EZ/ZZP company form is for starting entrepreneurs. The BV company form is for more advanced entrepreneurs. In this article we will make the comparison without taking the 30% ruling into consideration. In another article, we explain the difference between the ZZP and the BV+30%. Working in the Netherlands as a self employed person requires you to have a visa. We have an FAQ section for freelancing in general, in the Netherlands.

The EZ

The EZ company form is a registration at the Chamber of Commerce. It does not require a notarial deed of incorporation. You just need to make sure you are registered with a BSN number, and bring your passport. The EZ is a see-through entity, which means that the assets and liabilities of the EZ are not separate from the owner. Dutch law also provides for an EZ option for multiple persons. This is called the Vennootschap onder Firma (or VOF). Everything described here about the EZ applies equally to the VOF. The VOF only differs from the EZ in the contractual terms agreed upon between the founders. In terms of tax and liability they are the same.

There are considerable income tax advantages to be had in the ZZP/eenmanszaak. Look for the “Zelfstandigenaftrek” , “Startersaftrek” and “MKB Winstvrijstelling”. This can add up to € 10,000 - € 15,000 per year in tax free income. Make sure you comply with the rules that apply here. In short:
- spend at least 1224 hours per year in your EZ
- have 3 or more clients
- don’t have more than 70% revenues from one single client
- promote your business, for example using a website
- If you work intensively for one client, use correct freelance agreements.
- Make sure your work does not resemble the work of regular employees in your client’s company (for example: don’t lead or direct other employees, keep freedom in how to perform your work, what times and from where).

NB: If you don't meet the above criteria, you will not be able to use the tax advantages of the ZZP.


Advantages of the EZ
+ Easy and cheap to set up;
+ Income tax advantages up until € 100,000 per year;
+ Slightly lower accounting costs than the BV.


Disadvantages of the EZ
- Personal liability for the founder;
- Has no shares, so cannot involve investors;
- No possibility to apply or transfer a 30% ruling;
- Tax inefficient after profits of € 100,000 per year or more
- No possibility to save up cash for personal financing purposes.
- Expensive to convert to BV later on

In short : if you’re working as a freelancer with little or no assets, don’t plan to hire personnel, don't mind the personal liablity and earn less than € 100,000.00 per year : you're better off with this one.

The BV

The BV is similar to the Anglo-Saxon Limited Liability Company. It is a legal entity (not a seethrough entity like some US versions of the LLC), which means it has assets and liabilities separate from the founder. It is also divided into shares. As with the LLC, the liabilities of the founder are limited to the amount of share capital they have put up (normally € 1,20 or a similar amount). Liabilities of the company will normally never end up on the doorstep of the founder. Exceptions do apply of course, for example if the founder explicitly signs for personal liability or when the founder commits fraud or willful misconduct to the detriment of the BVs creditors. In all these cases the personal liability results from the founder’s own explicit actions.

Advantages of the BV
+ No personal liability for the founder(s);
+ Tax efficient from € 100,000 per year or more in profits;
+ Possibility to apply for or transfer a 30% ruling;
+ Personal holding BV creates possibilities for personal wealth planning;
+ Receive dividends and sale price of shares tax-free under the so called “participation exemption”.

Disadvantages of the BV
- Notarial set up costs at the beginning.
- Slightly higher monthly accounting costs
- No tax breaks, so less tax efficient with profits under € 100,000 per year.

In short: If you’re planning on earning € 100,000 or more per year, are looking into protection from personal liability : you should consider setting up a BV. You can read more about setting up your company here. 

Accounting and compliance

As a freelancer in the Netherlands, you are going to need an adequate accountant to take care of your tax and accounting compliance. For this, feel free to reach out to our accounting partners at UWBS via here. They offer accessible accounting services for a reasonable price. They usually include your personal income tax returns as a free extra service.