Sole Proprietorship in the Netherlands (Eenmanszaak)
A sole proprietorship is also called a one-man business or sole trader. Registering such a business guarantees your full independence as its owner and founder. The proprietorship can have more members working for it and employ staff, but its owner is only one.
Establish a Sole Proprietorship in the Netherlands
A sole proprietorship can be established without a deed prepared by a notary. It is mandatory, however, to register the business at the Trade Registry. Each private individual can establish only one sole proprietorship, but the proprietorship can have several trade names and perform various activities using the different names. These business operations can be performed at the registered address or at a branch of the sole proprietorship located elsewhere.
The owner of a sole proprietorship carries the responsibility for everything relevant to the enterprise, i.e. all its legal acts, liabilities and assets. The law makes no distinction between business and private property. Therefore business creditors are free to require the recovery of any debts from personal property and vice versa – private creditors can require recovery from business property. In case the proprietorship faces bankruptcy its owner goes bankrupt as well. In case the owner is married under a regime of common property, the creditors are also eligible to claim the spouse’s property. Spouse liability may be avoided through an agreement prepared by a Latin notary and concluded before or after the marriage. Spouses, however, are generally asked to co-sign loan-related documents and the mentioned agreement may fail to provide the expected protection. Our agents in company incorporation can help you with further details regarding liability.
In order to decrease liability risk, many sole traders change their company type to a limited liability company, also known as B.V. Read our article: Establishing a Dutch company: Sole Proprietorship or B.V.
Tax & social security
For taxation purposes, the profit of sole proprietorships is considered as income. If the Tax Service considers the owner an entrepreneur, then he is entitled to investment, entrepreneurship and retirement allowances. The owner is not entitled to benefits for sickness, income and work, and unemployment insurance. It is best to cover such risks by taking out insurances. Sole proprietorship owners can use any of the national schemes for insurance listed below:
Tax & social security
With sole proprietorship, the law makes no distinction between business and private property. If the owner of the sole proprietorship dies, both his/her private and business property will be inherited by the heirs. It is advisable to ensure the continuity of your business in advance. Our tax experts can give you more information on the matter. Our experienced incorporation agents can consult you on company formation Netherlands.