A sole proprietorship (eenmanszaak) is the simplest business form in the Netherlands: you register with the Chamber of Commerce (KVK) and you can start trading, without a notary or minimum capital. The price of that simplicity is that you and your business are legally the same person, so you are personally liable for all business debts with your private assets.
That personal liability is the main reason entrepreneurs later move to a private limited company (besloten vennootschap, BV). Against it stand real advantages: low set-up costs, simple administration and access to the income tax facilities for entrepreneurs. Below we explain how the eenmanszaak works, how to register one, what it means for tax and liability, and when it is time to change structure.
What is an eenmanszaak?
An eenmanszaak is a business run by one natural person who is the sole owner. It has no legal personality of its own, so every contract the business concludes is a contract concluded by you personally.
Imagine a freelance graphic designer. The profit from each project is her personal income. If she buys a computer on credit for the business, the debt is her personal debt. There is no separate company that can go bankrupt while she walks away. This direct link between the person and the business is the defining feature of this legal form.
Being the only owner does not mean working alone. A sole proprietor may hire employees. What you cannot do is share ownership: as soon as two or more people run a business together for joint account, you usually have a general partnership (vennootschap onder firma, VOF) or another partnership, with different rules on liability.
What are the advantages?
The eenmanszaak is quick and cheap to set up and gives you complete control. You decide everything yourself, there are no shareholders to report to and no notarial deed is needed.
The administration is lighter than for a BV. You must keep proper business records and retain them for seven years, as every entrepreneur must, but you do not have to prepare and file annual accounts with the KVK. Profits are taxed as your personal income, and as an entrepreneur for income tax purposes you may be entitled to specific tax facilities, which we describe below.
For many freelancers, consultants and starting businesses, this is the natural first step. It allows you to test an idea without much upfront investment. You can find more about the practical steps to become an independent entrepreneur in the Netherlands in our separate article.
What is the main risk?
The main risk is unlimited personal liability. Because the law makes no distinction between you and your business, a creditor of the business can recover the debt from all your assets, including your house, car and savings (Article 3:276 of the Dutch Civil Code, BW).
This applies to all business debts: unpaid supplier invoices, a bank loan, a lease of business premises and a claim for damages from a dissatisfied client. If a client obtains a judgment against you for a faulty piece of work, the bailiff can seize your private bank account just as easily as the business account.
If you are married or in a registered partnership, your matrimonial property regime also matters. Since 1 January 2018, marriages are concluded in a limited community of property by default, but business creditors may still be able to recover from jointly owned property. Prenuptial agreements (huwelijkse voorwaarden) can limit that exposure for your partner. Discuss this with a notary before you start a business with significant risks.
If the business can no longer pay its debts, bankruptcy of an eenmanszaak is your personal bankruptcy. The debts do not disappear when the bankruptcy ends. A natural person may, under conditions, apply for the statutory debt restructuring scheme (Wet schuldsanering natuurlijke personen, WSNP), but that is a lengthy and demanding process.
How do you register your sole proprietorship?
You register your eenmanszaak in the Business Register (Handelsregister) of the KVK. Do this no earlier than one week before and no later than one week after you start trading.
You start the registration online with the KVK registration form, for which you log in with DigiD. That requires a Dutch citizen service number (burgerservicenummer, BSN). If you do not live in the Netherlands, you can obtain a BSN through registration in the Non-Residents Records Database (RNI). In most cases you then complete the registration at an appointment at a KVK office, bringing valid proof of identity and the documents that the KVK lists in its confirmation email. In some cases the registration is completed digitally and no appointment is needed. A one-off registration fee applies.
After registration you receive your KVK number straight away. For more background on what the register contains and who can see your details, read our article on the business register in the Netherlands.
Choosing a trade name
Before registering, choose a trade name (handelsnaam). Under the Trade Name Act (Handelsnaamwet), you may not use a name that is identical or confusingly similar to the name of an older business in the same area and sector. You may also not use a name that is misleading, for example by suggesting that you are a BV when you are not. Check the Business Register and the trademark registers before you commit to a name, your logo and your domain.
Registration with the Tax and Customs Administration
The KVK passes your registration on to the Tax and Customs Administration (Belastingdienst). If the Belastingdienst considers you an entrepreneur for VAT purposes, you receive a VAT tax number and a separate VAT identification number by post. You do not have to register separately.
How is a sole proprietorship taxed?
Your business profit is not taxed separately but as part of your personal income, in Box 1 of the income tax (inkomstenbelasting). The rates are progressive, so the higher your profit, the higher the rate on the top part of it.
Whether you qualify as an entrepreneur for income tax purposes is decided by the Belastingdienst, not by your KVK registration. It looks at factors such as the number of clients you work for, whether you bear business risk, how much time you spend and how you present yourself. Registration with the KVK is not enough on its own.
Deductions for entrepreneurs
If you are an entrepreneur for income tax purposes, several facilities may reduce your taxable profit. The self-employed deduction (zelfstandigenaftrek) and, for starting entrepreneurs, the starter’s deduction (startersaftrek) require you to meet the hours criterion (urencriterium): at least 1,225 hours per calendar year spent on your business. The starter’s deduction can be claimed up to three times in your first five years as an entrepreneur.
The SME profit exemption (MKB-winstvrijstelling) exempts a percentage of the profit that remains after the other deductions, and it does not depend on the hours criterion. The government has been reducing the self-employed deduction step by step in recent years, so check the amounts for the current year on the website of the Belastingdienst.
Keep a record of your hours throughout the year. The Belastingdienst may ask you to show that you met the hours criterion, and a reconstruction afterwards is rarely convincing. Law & More does not advise on tax planning. For your tax return and the optimal use of these facilities, we recommend a tax adviser or accountant.
VAT
As a rule you charge VAT (btw) on your invoices and pay it to the Belastingdienst, usually through a quarterly VAT return. In that return you can deduct the VAT you paid on business purchases.
If your annual turnover in the Netherlands is no more than EUR 20,000, you can opt for the small businesses scheme (kleineondernemersregeling, KOR). You then do not charge VAT and do not file regular VAT returns, but you also cannot reclaim the VAT on your purchases. Whether that is beneficial depends on your costs and on whether your clients are businesses that can reclaim VAT themselves.
How can you limit your legal risks?
You cannot switch off personal liability in an eenmanszaak, but you can reduce the chance that a claim ever reaches your private assets. Insurance, good contracts and clear general terms and conditions are the three main tools.
Start with insurance. Professional liability insurance (beroepsaansprakelijkheidsverzekering) covers claims for errors in your work, which is essential for consultants, IT specialists and other service providers. General business liability insurance (bedrijfsaansprakelijkheidsverzekering) covers damage to persons or property that you cause in the course of your work. Check the exclusions and the insured amount against the size of your contracts.
Next, use a written contract for every assignment of any importance. Describe what you will deliver, by when, at what price and on what payment terms. Include a limitation of liability, for example to the amount of the invoice or the amount your insurer pays out. Such a clause only protects you if it validly forms part of the contract.
Finally, draw up general terms and conditions and make sure they apply. Under Dutch law your conditions only bind your client if you provided them before or when the contract was concluded. For contracts with consumers, stricter rules apply to clauses that limit your liability.
Keep your business and private finances apart. A separate business bank account is not legally required for an eenmanszaak, but it makes your bookkeeping and tax return far simpler and shows clients and the Belastingdienst that you run a real business. It does not, however, protect your private assets: creditors can still recover from both accounts.
Are you really self-employed?
Registering an eenmanszaak does not make you self-employed in the eyes of the law. If you in fact work like an employee, a court can classify your contract as an employment contract, with all the consequences for you and your client.
Under Article 7:610 BW, the decisive question is whether you perform work for pay under the authority of the client. In a 2023 judgment in the Deliveroo case, the Supreme Court (Hoge Raad) confirmed that all circumstances count, including whether your work is part of the client’s normal business, how long you work for the client, and whether you present yourself as an entrepreneur with several clients. The Belastingdienst has resumed enforcement of the rules on false self-employment since 1 January 2025. If you work full-time for a single client for a long period, have your arrangement checked.
When should you move to a BV?
Consider converting to a BV when your risks or profits grow, when you want to bring in partners or investors, or when you want to build a business that can be sold. A BV has legal personality of its own, so as a rule its debts are not your personal debts.
Risk is often the first reason. As you take on larger contracts, hire staff or rent premises, the claims that could reach your private assets grow with the business. In a BV, creditors can in principle only recover from the company. That protection is not absolute: directors can be personally liable in cases of improper management, and banks and landlords often ask for a personal guarantee.
Tax can be a second reason. Above a certain level of profit, the combination of corporate income tax and the tax on your salary and dividends from a BV may work out better than income tax on the profit of an eenmanszaak. Where that tipping point lies depends on your figures and on the tax rules of the year, so have a tax adviser calculate it for you.
Ownership is a third reason. Investors want to acquire shares, and shares only exist in a company. An eenmanszaak is tied to you as a person; selling it means transferring its assets, contracts and goodwill one by one.
What does converting involve?
A BV is incorporated by a notarial deed. The business of the eenmanszaak is then transferred to the BV, often with retroactive effect for tax purposes under specific conditions that a tax adviser can check.
Existing contracts do not transfer automatically. For a transfer of a contract to the BV, the other party must cooperate (Article 6:159 BW), so ask clients, suppliers and your landlord for their consent. If you have employees, their employment transfers to the BV by operation of law, with the same terms and conditions (Article 7:663 BW). Update your general terms and conditions, website and invoices so that clients know they are now contracting with the BV.
What changes when you hire staff?
You may employ staff in an eenmanszaak, but you then take on all the obligations of an employer. You register with the Belastingdienst as an employer, withhold payroll taxes and must continue to pay at least 70 percent of the salary for up to two years if an employee falls ill (Article 7:629 BW).
Use a written employment contract from day one, and check which collective labour agreement (cao) applies in your sector. Because you are personally liable, a claim by an employee is also a claim against your private assets. This is one of the moments at which many entrepreneurs decide to move to a BV.
In summary
- An eenmanszaak has no legal personality: you are personally liable for all business debts with your private assets.
- You register it with the KVK within one week before or after you start trading; the KVK passes your details to the Belastingdienst.
- Profit is taxed in Box 1; entrepreneur facilities such as the self-employed deduction depend on the hours criterion of 1,225 hours.
- Insurance, written contracts and valid general terms and conditions reduce the risk that a claim reaches your private assets.
- Consider a BV when risks, profits or ambitions for partners and investors grow.
Frequently asked questions
Can I hire employees as a sole proprietor?
Yes. A sole proprietor may employ staff, but you then have all the obligations of an employer: registering as an employer with the Belastingdienst, withholding payroll taxes, following Dutch employment law and continuing to pay wages during sickness for up to two years.
How do I close down my sole proprietorship?
You deregister the eenmanszaak from the Business Register at the KVK, which informs the Belastingdienst. You remain personally liable for any outstanding business debts, and you must still file your final VAT return and income tax return.
Do I really need a separate business bank account?
Not legally, but it is strongly advisable. A separate account simplifies bookkeeping and your tax return. It does not protect your private assets, because business creditors can recover from all your accounts.
Can my partner be liable for the debts of my eenmanszaak?
Your partner is not personally liable for your business debts, but depending on your matrimonial property regime your creditors may be able to recover from jointly owned property. Prenuptial agreements can limit this; a notary can advise on the options.
Law & More advises entrepreneurs on the choice of legal form, contracts and general terms and conditions, and assists when a business moves from an eenmanszaak to a BV.
Unsure where you stand? Tell us about your situation. We will let you know your options within one working day.
How Law & More can help you with this is explained on our corporate lawyer page.
