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Converting a sole proprietorship into a BV is done via contribution — either tax-neutral (without tax settlement) or taxable (with settlement on cessation profit). The conversion consists of: establishing the BV, signing the deed of contribution at the notary, transferring customers and suppliers, and updating the Chamber of Commerce and VAT. Lead time: one to three months, including tax preparation. The choice between tax-neutral and taxable is the most important one — have an accountant do the calculations.
The short answer
- Calculate noisy versus silent with your accountant.
- For silent transfer: file a letter of intent (within 9 months of the desired effective date).
- Incorporating a BV at the notary — often with a holding-operating company structure.
- Deed of Contribution: sole proprietorship transfers to the BV (all assets and liabilities, or via a shareholding structure).
- Transfer administration: Chamber of Commerce, VAT, bank, contracts, customers, suppliers, personnel.
When is converting wise?
Three rules of thumb:
- Profit above approximately €100,000 – €120,000 per year. Below that threshold, the self-employed deduction and SME profit exemption in income tax are often more favorable. Above this limit, the BV (combined with a holding company) becomes more fiscally attractive.
- Increased liability risk. Riskier activity, larger claims, insurance limitation — the limited liability of a BV becomes more valuable.
- Growth plans or exit prospects. Investors, succession, sale — all simpler with a BV structure. See why a holding company.
When in doubt: a sole proprietorship works just fine and is cheaper in terms of administrative costs. The conversion is not a status — it is a functional choice.
Silent or noisy: the choice
The tax route is by far the most important:
- Silent transfer (silent contribution): no immediate income tax, three-year continuation obligation. Good for substantial goodwill and a long horizon.
- Noisy (noisy contribution): direct income tax settlement, step-up in book values. Suitable for limited hidden reserves or income tax losses.
An accountant's calculation taking a few hours is typically worth thousands of euros in tax. Take this step beforehand — not after the notary.
The step-by-step plan in detail
Step 1 — Preparation (2–4 weeks):
- Accountant's calculation noisy versus silent.
- Determination of structure: one BV or holding company + operating company.
- Name, purpose description, share structure.
Step 2 — Letter of intent (for tax-neutral transactions):
- File with the Tax and Customs Administration before October 1 for retroactive effect to January 1.
- Don't forget — without a letter of intent, the silent facility lapses.
Step 3 — Notary (1–2 weeks):
- Incorporation of a BV (and possibly a holding company).
- Contribution deed: sole proprietorship transfers to the BV.
Step 4 — Administration (2–4 weeks):
- Chamber of Commerce: deregister old registration, register new BV.
- Tax and Customs Administration: VAT number of new BV, payroll tax.
- Bank: open business account for BV, close sole proprietorship account.
- Informing customers and suppliers about the new entity.
- Current contracts: have them transferred to the name of the BV (where possible).
- Personnel: transfer of employer pursuant to Art. 7:662 et seq. of the Dutch Civil Code.
How much does it cost?
- Notary: €600 – €1,500 for BV + contribution deed. For a holding structure €1,000 – €2,500.
- Accountant: €1,000 – €3,000 for calculation, tax advice, and contribution administration.
- Any legal contracts: shareholders' agreement (in case of multiple founders), management agreement, AGM update.
The total is often €1,500 – €5,000. In the case of a contribution with tax implications, any income tax on cessation profit is added.
Honest recommendation
Converting a sole proprietorship into a BV is a serious step, but not a disaster. The most important work lies in the preparation (choosing a route, determining the structure) and the administrative execution. Invest in a good accountant and legal counsel before starting — the savings on tax errors and wrong structural choices far outweigh the hourly rates.
For the choice between routes: silent input and noisy input.
Frequently Asked Questions
For profits above approximately €100,000 – €120,000 per year (where the BV becomes more tax-efficient), in case of increased liability risk, or with plans for growth, investors, or an exit. Below that threshold, a sole proprietorship is often more tax-favorable.
Typically 1–3 months, including tax preparation, notary services, Chamber of Commerce registration, and VAT conversion. The legal part itself (notary) is completed within 2–3 weeks; the administrative processing (banks, customers, suppliers, staff) runs in parallel.
€1,500 – €5,000 total for notary, accountant, and legal documents. In the case of a contribution with tax implications, income tax on the cessation profit is added. Costs run higher for a holding structure and more complex situations.
It depends on the size of hidden reserves and goodwill, your income tax losses, and your time horizon. With substantial goodwill and a long time horizon: tax-neutral. With limited reserves or income tax losses: taxable. Have an accountant calculate it.
Customers must be informed of the transition to the BV. Existing contracts will be transferred where possible (assignment or new agreement). For standard B2B customers, this is usually not complicated; for long-term or complex contracts, consulting a lawyer is worthwhile.
Employees transfer to the BV via a transfer of undertaking (Art. 7:662 et seq. of the Dutch Civil Code). Terms and conditions of employment remain the same; only the employer changes. Important: inform the staff in a timely manner and ensure a written transfer.
Theoretically yes, via a silent return (Art. 14c Corporate Income Tax Act). In practice, it is rare and has tax implications. A sole proprietorship following a BV is generally only beneficial in the event of a significant decline in activity. Discuss with a tax specialist.
