Converting your eenmanszaak to a BV

You can turn your eenmanszaak (sole proprietorship) into a BV (private limited company). Reasons for doing this are:

• less personal liability,
• tax benefits,
• making it easier to sell the company.

The big difference is that after the conversion it is not you as a person but the BV itself that drives the business. Your BV gets a new KVK number.

3 ways to convert an eenmanszaak into a BV

There are 3 ways to convert an eenmanszaak into a BV.

• Asset-liability conversion
• Silent conversion, tax-free
• Conversion subject to tax

Read what you need to do in each situation.

1. Asset-liability conversion

With an asset-liability conversion (activa-passivatransactie) you can quickly and easily convert your sole proprietorship into a BV. You sell all the assets and debts (liabilities) of the eenmanszaak to the newly established BV. Your assets appear on the BV's balance sheet for the market value at that time, so the BV starts with new book values.

What do you have to do?

1. Set up the private limited company (BV) at the civil-law notary. The civil-law notary will then ensure that your BV is registered with the Netherlands Chamber of Commerce KVK.
2. You draw up an asset-liability document. This states which assets and debts you are selling to the new BV. You can draw up this document yourself, or have a civil-law notary or an (online) commercial provider draw it up.

When converting your eenmanszaak via an asset-liability transaction, you do not need a deed of transfer. You do not need to provide the document to the Tax Administration for approval.

2. Silent conversion (not subject to tax)

You can also convert your eenmanszaak into a BV in a silent conversion. That is when you transfer your entire business into the BV. The BV continues with the same book values as those of your sole proprietorship. This means that the BV starts with a balance sheet equal to the eenmanszaak’s final balance sheet. This is an advantage of the silent transfer: you do not have to pay tax on the capital gains of your sole proprietorship.

Example

You bought a commercial property 20 years ago. This is on the books for €100,000. The actual value is now €600,000. Are you silently converting your eenmanszaak into a BV? Then you can put the property on the BV's balance sheet for €100,000. You do not pay tax on the capital gain of your property at that time. If you dissolve or sell your BV in the future, you then pay tax on the capital gain of the property. So, the taxation is delayed.

Conditions for a silent transfer

To convert your sole proprietorship into a BV, you must meet certain rules (in Dutch). For example, you may not sell the shares you receive for 3 years.

What do you have to do?

Do you want to transfer your eenmanszaak with retroactive effect from 1 January, subject to tax?

1. You draw up a letter of intent (in Dutch) together with your accountant or a specialist.
2. You send the letter of intent to the Tax Administration before 1 October of that year.
3. You have until 1 April of the following year to set up a BV through the civil-law notary. And transfer the sole proprietorship. Based on a contribution balance sheet and description, the notary draws up a deed of transfer (akte van inbreng) for this purpose.
4. The civil-law notary registers the BV and deregisters the eenmanszaak with KVK.

3. Conversion, subject to tax

With this conversion subject to tax (ruisende inbreng), you sell your eenmanszaak to a newly formed BV. As with the asset-liability transaction, the BV starts with new book values. So, your assets will appear on the BV's balance sheet for their current market value. The difference with the asset-liability transaction is that with a transfer subject to tax, you can convert your business retroactively up to 3 months ago.

Are you converting your sole proprietorship subject to tax? Unlike with the silent transfer, you do not have to wait 3 years before selling your shares.

What do you have to do?

1. You draw up a letter of intent (in Dutch) to the Tax Administration together with your accountant or a specialist. In this letter, you say that you are transferring your eenmanszaak to a BV.
2. A civil-law notary sets up the BV. They must draw up a deed of transfer (akte van inbreng). This states all the assets and liabilities of your sole proprietorship. These assets and liabilities are transferred to the BV.
3. The civil-law notary takes care of registration of the BV and deregistration of the eenmanszaak at KVK.

Retroactive transfer as of 1 January

Do you want to transfer your eenmanszaak retrospectively as of 1 January? Then you must send the letter of intent (in Dutch) to the Netherlands Tax Administration within 3 months. You must do this before 1 April of the current year if you want it to take effect from 1 January. The results booked from 1 January will then appear on the BV's balance sheet. This way, you will have the tax benefits of the BV sooner. You also do not have to keep separate accounts or prepare separate financial statements for the first months of that year. You then have until 1 October of that year to set up the BV and to actually convert your sole proprietorship into the BV.