Your business is doing well: profits are growing significantly and you may have hired staff by now. You have once heard/read that at some point it may be wiser to become a BV, so that you pay less tax. What exactly is the situation?
Liability
With a sole proprietorship, the owner is fully liable for the business (even with private assets). A BV, on the other hand, is a legal entity and therefore liable itself. A BV is attractive for businesses with high investments and risks.
Tax benefit when income is high:
You pay income tax on the profit from a sole proprietorship, which means a rate of 49.50% (2024) on a box 1 income higher than € 75,518. This is 19% on the first € 200,000 and above that 25.8%.
Other advantages of a BV
- You can divide your property and financial risks over several limited liability companies.
- Having a BV can make a (more) professional impression.
- Investors can be attracted through the issuance of shares.
- Selling your business is more fiscally attractive. You pay corporate tax on the goodwill*.
*: the (invisible) capital gain of a business. This capital gain occurs when the business is sold for a higher amount than the value of the hard assets (inventory, accounts receivable and stock). The "goodwill" is not valued on the balance sheet, but consists of knowledge, customers, brands, personnel, reputation, etc. When selling a sole proprietorship, you have to deal with income tax rates.
Where, if any, is the tipping point from a sole proprietorship to a BV?
It is difficult to determine exactly a tipping point. It strongly depends on the type of business, the salary you want to pay yourself and the extra costs (belonging to a BV). At the moment (2024) the tipping point lies at roughly a profit of more than € 120,000 per year. Then it is fiscally more attractive to have a BV.
Keep in mind that as a BV you also have higher costs. In order to establish a BV, you must go to a notary; for a standard BV, the costs are approximately € 500 - 1,500. The notary takes care of the registration in the Commercial Register of the Chamber of Commerce. Registering with the Chamber of Commerce costs more. The cost of an accountant will be higher for a BV.
In what ways can a sole proprietorship be converted to a BV?
And when can you then sell your new BV?
1. Asset/liability transaction
In this transaction, you sell all your assets and debts to the new BV. Income tax must be paid on the goodwill, which arises when calculating the sale value. You may sell your new BV quickly.
2. Restrictive contribution
With the reclusive contribution you sell the sole proprietorship/venture to the BV. Income tax must be paid on the goodwill that arises when calculating the sale value. You may sell your new BV quickly.
3. Silent contribution
The BV starts with the book values of the sole proprietorship/vof. No income tax has to be paid on the goodwill. You may only sell your BV after 3 years.
Practice shows that entrepreneurs choose the silent contribution the least. The asset/liability transaction is most popular because of its simplicity and speed. The silent contribution is favored by entrepreneurs with a lot of added value in their business.
