How do I convert my sole proprietorship into a BV?
Short answer
You transfer your sole proprietorship (eenmanszaak) into a new BV through a civil-law notary, either as a taxable or a tax-free transfer. With a taxable transfer, you settle tax on hidden reserves and goodwill; with a tax-free transfer, you roll them over to the BV. With a letter of intent filed within three months, the transfer can be backdated up to nine months.
Updated on · Reviewed by the tax advisers at Boekhoudvriend
A BV becomes attractive if your profit is consistently high, you want to limit your liability or you want to retain profit for investments. The conversion is a tax and legal step that you should calculate carefully in advance.
Taxable or tax-free transfer
- Taxable (ruisend): you sell your business to the BV and pay income tax on the hidden reserves and goodwill
- Tax-free (geruisloos): the BV takes over the tax book values; you pay no tax now, but the tax claim is rolled over
- A tax-free transfer has extra conditions, such as a ban on selling the shares within three years
With retroactive effect
If you file a letter of intent (intentieverklaring) with the Dutch Tax Administration (Belastingdienst) within three months of the desired start date, the BV can take over the business as if this had happened from that date. The BV must then be incorporated within nine months.
What else is involved
Besides the notary, you arrange a new bank account, payroll for your DGA salary and new contracts. We guide the conversion and set up your new bookkeeping.
Sources
- Belastingdienst: when are you an entrepreneur for income tax? (in Dutch)
- KvK: starting a business (in Dutch)
This answer is general information, not personal advice. Your own situation may work out differently, so feel free to ask our team.