Soleproprietorship or limited company (BV)?

When starting a new company, you choose a legal form: this is the legal form of the company. Starting entrepreneurs regularly have doubts about the choice between setting up a sole proprietorship or BV (Private Company). The main differences between these legal forms are liability, taxes and paperwork.

Differences sole proprietorship and BV

• Establishment: you need a notary to start a private limited company (BV). Rates for the foundation start at around 400 euros, but at local notaries the costs can rise to over a thousand euros. It is possible to use another company already established in the EU. With the 2012 legislative amendment, there is no longer a minimum of starting capital for a BV. A sole proprietorship only requires a visit to the Chamber of Commerce;
• Board: a sole proprietorship has an owner, a BV has a management board and possibly shareholders. The director (DGA) must receive a minimum salary of EUR 56,000 (figure 2025) per year;
• Liability: in a sole proprietorship, the owner is fully liable (including with his private assets) for the company. A BV is a legal person and therefore itself liable, the owners are not. Only if there is mismanagement, the management is liable with its private assets. A BV is therefore attractive for companies with high investments and risks;
• Tax: a sole proprietorship is cheaper for companies with a low profit because of the tax benefits as deductions: mainly the self-employed deduction, start-up deduction (first three years) and the SME profit exemption depress the net profit. However, if the turnover increases, the BV becomes more attractive with a lower tax rate (corporation tax), but this very depends on the situation;
• Financial statements: a BV must submit an annual report to the Chamber of Commerce. Requirements of these annual accounts depend on the size of the company.

Tax difference sole proprietorship and BV

You pay income tax on the profits from a sole proprietorship. This is equal to the rate that salaried individuals pay on their income (Box1), which means a top rate of 49.50% (2025). At the BV, corporation tax is paid on the profit. The corporate income tax is 19% over the first € 200,000 and above this amount 25.8% (2025). The DGA (director) pays income tax on his salary and dividend tax when the profit is distributed privately. Rates may change each year based on political preferences though.

In principle, the tax with a BV is lower than with a sole proprietorship, but with a BV there are additional costs. For example, it is mandatory to draw up annual accounts and there are compulsory audit fees. The big advantage of the sole proprietorship lies in the many tax advantages such as the self-employed person’s allowance, investment allowance and SME profit exemption. As a result, certainly with a lower profit, the tax benefit for a sole proprietorship will be relatively greater than the benefit for the BV. But these benefits are being reduced. And corporate income tax rates may vary as well as the rates applicable in case the shareholder pays out dividend.

Which is better: a sole proprietorship or BV?

The main elements to take into account when choosing between a BV or sole proprietorship are:

• Risk: when a company runs a lot of risk, the wisest choice is to choose a BV as legal form. A sole proprietorship is sufficient at low risk.
• Profit: taxation depends on the profit and how and when it is distributed to the owner.
• Paperwork: A BV requires more paperwork than a sole proprietorship and also requires a payroll administration.