Dutch Tax Authority
Many entrepreneurs start with a sole proprietorship, but reach a point where a private limited company (BV) becomes a better fit.
When transitioning from a sole proprietorship to a BV, there are three common routes:
① Tax-neutral transfer of your sole proprietorship into a BV
② Asset-liability transfer of your sole proprietorship into a BV
③ Closing the sole proprietorship and starting a new BV
On paper, these options may look similar. In practice, they are fiscally and strategically very different. In this article, we explain the differences.
With a tax-neutral transfer, you convert your sole proprietorship into a BV without immediately paying tax on the value you have already built up.
This means:
∙ Your business continues in the BV
∙ Assets and liabilities (clients, inventory, contracts) are transferred at book value
∙ You do not settle tax now on:
∙ Hidden reserves
∙ Goodwill
∙ Accumulated profits
The tax claim is deferred to the future. You only pay tax later, for example when distributing dividends or selling shares.
Important: you must hold the shares you receive for at least three years. If you do not, the fiscal benefit lapses.
In a tax-neutral transfer, the Dutch tax authorities effectively say:
“We will not tax you now, but we do register that this value exists.”
You are therefore shifting the taxation moment. You are not avoiding tax, but postponing
This is often advantageous if you want to continue investing and growing.
Unless you deliberately start a BV as of a new financial year (1 January) without applying tax deferral.
In an asset-liability transfer, your sole proprietorship sells (part of) the business to the BV.
This means:
∙ The BV acquires assets such as inventory, customer base and possibly goodwill
∙ Liabilities can also be transferred
∙ This takes place at market value
The difference compared to a tax-neutral transfer is that an asset-liability transfer triggers immediate taxation. Any profit realised is taxed in Box 1 (personal income tax).This route is often chosen when:
∙ The accumulated value is limited
∙ Flexibility is more important than tax deferral
∙ You do not want ongoing deferral obligations
The third option is to completely close the sole proprietorship and then start a new, “clean” BV.
What happens:
∙You officially close your sole proprietorship
∙ A final tax settlement with the tax authorities follows
∙ All value is taxed in Box 1, such as:
∙ Hidden reserves
∙ Inventory
∙ Goodwill
∙ You then start a new BV with a clean balance sheet
This may feel like a fresh start, but usually means paying tax immediately on your sole proprietorship.
This route can be suitable if:
∙ Your sole proprietorship has little to no value
∙ There is no goodwill
∙ Your activities are changing significantly
∙ Turnover and profits are still low
In those cases, there is little value to defer and the fiscal impact remains limited.
Tax-neutral transfer
∙ No immediate tax
∙ Business history continues
∙ Hogere oprichtingskosten bij de notaris dan optie drie
∙ Accountant, bookkeeper or tax advisor required
∙ Suitable for growth and accumulated value
Asset-liability transfer
∙ Immediate tax payment
∙ More flexibility
∙ BV acquires the business at market value
∙ Fewer ongoing fiscal obligations
∙ Higher notary costs than option three
∙ Accountant, bookkeeper or tax advisor required
Closing sole proprietorship and starting a BV
∙ Immediate tax settlement with the tax authorities
∙ Full reset
∙ Only sensible with low value
∙ Standard notary incorporation costs
Suppose:
∙ Your sole proprietorship has €80,000 of accumulated value
Tax-neutral transfer
∙ €0 tax payable now
∙ BV continues the business
∙ Tax payable later
∙ Higher incorporation costs
Asset-liability transfer
∙ Immediate tax in Box 1
∙ BV purchases the business
∙ More flexibility
∙ Higher incorporation costs
Closing and starting a new BV
∙ Immediate tax in Box 1
∙ Less starting capital
∙ BV starts from scratch
∙ Standard incorporation costs
The choice is not about what feels “easier”, but about what you have already built.
∙ Do you have growth, profits and long-term plans?
→ Tax-neutral transfer is usually the smartest option
∙ Was your business small or temporary?
→ Asset-liability transfer or stopping and starting over may be sufficient
Are you unsure? There is a good chance your sole proprietorship already contains more value than you realise
Sarabel supports entrepreneurs with:
∙ Choosing the right route
∙ Incorporation of the BV (we have a partner notary)
∙ Coordination with your notary
∙ Planning a tax-neutral transfer
∙ Practical guidance on BV structures or a BV with a holding company
Making the right choice now can save you thousands of euros in taxes later.