BV or sole proprietorship: the big decision
At some point many entrepreneurs face the same question: do you operate as a sole proprietor for income tax purposes, or do you set up a BV and become a DGA (director-major shareholder)?
Sole proprietorship (IB entrepreneur)
Advantages:
- Easy to start, no notary required
- Lower setup and maintenance costs
- Entrepreneur tax facilities, such as the self-employed deduction of EUR 2,470 in 2025, if you meet the hours criterion
- Less administrative burden
Disadvantages:
- Personal liability: your private assets can be at risk
- Tax pressure can rise at higher profit levels
- No salary as such, only entrepreneurial income
BV (DGA)
Advantages:
- Limited liability because the BV is a separate legal entity
- Corporate income tax applies to the profit and you can keep profits inside the BV
- More formal structure
- More options for pension planning
Disadvantages:
- Incorporation costs of roughly EUR 1,000 to EUR 2,000
- Annual accounts are required
- More administration
- No self-employed deduction
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When should you choose a BV?
The Belastingdienst does not use one fixed profit threshold for this decision. Whether a BV is more favorable depends on your profit, box 1 entrepreneur deductions, the DGA customary salary, dividend plans, and whether you want to leave profits in the company. It should be calculated for your own situation rather than based on a rule of thumb alone.