Establishing a Sole Trader in Netherlands

If you would like to know more about the sole trader, as well as about other business forms that can be incorporated in the Netherlands by local and foreign investors, please reach out to our team of specialist Dutch lawyers. Our attorneys can help individuals interested in establishing a sole trader in the Netherlands.

What is the sole proprietorship?

A sole trader in the Netherlands is an individual business owner who manages his or her own activity and is fully liable for the debts of the company. The sole trader does not have legal personality. Its identity is that of the business owner and it can only be owned by one individual. Entrepreneurs who operate a sole trader in the Netherlands may hire employees.

Quick Facts
Establishing a sole proprietorship as foreigners	A valid residence or work permit is necessary for non-EU citizens; Our lawyers can help you attain them.
Liability	Individuals are solely liable for the company, its finances, and its debts.
Trade name and activities	It is possible to operate under trade names and engage in different commercial activities.
Establishing a sole proprietorship in Netherlands	– register with Chamber of Commerce (KVK), – register with Netherlands Tax Administration (Belastingdienst), – fill application form, – pay registration fee, etc.
Business address	KVK will use your private address; If you use a different address, you must provide a purchase or lease contract for the business premise.
Opening a separate bank account	Recommended to separate personal and business expenses. Our lawyers will help you open a new bank account.
Required documents	– registration form, – business details, – ID documents, – business address lease/purchase contract (if applicable), etc.
Tax allowances and benefits	– private business ownership allowance (zelfstandigenaftrek), – SME profit exemption (mkb-winstvrijstelling), – tax relief for new companies (startersaftrek)
Deregistration	You must notify the KVK and settle any outstanding matters with the Tax Administration; Our attorneys also assist with deregistration or legal entity changes.
Can hire employees (YES/NO)	YES
Social security contributions	You are obliged to pay the national insurance contributions and standard health insurance.
Income tax rate	From 35.75% (including national insurance contributions) to 49.50% in 2026, depending on the annual income.
VAT registration	Mandatory if selling taxable goods/services, unless eligible for the KOR (small business scheme).
Advantages of a sole trader in Netherlands	– quick setup, – complete control over business decisions, – tax benefits and incentives, – no minimum shared capital, – flexibility, etc.
Assistance	Our Dutch lawyers will answer all your questions about sole proprietorship and assist in the registration process.

Can I open a sole trader in any business field?

There is no restriction as to the field in which the sole trader can be used. Entrepreneurs can perform different commercial activities that are customarily carried out in the Netherlands (they can engage in the provision of services or the manufacture or sale of goods).

What are the liability rules?

No distinction is made between the company’s assets and the personal assets. In certain unfortunate cases, like bankruptcy, creditors can recover their debts by claiming either business assets or personal assets.

What institution is responsible for the registration of a sole trader?

The registration of a sole trader is supervised by the Dutch Business Register (our lawyers can provide legal support during the registration). Other institutions can also be involved in the registration, such as the Tax Administration, responsible for all the formalities related to the tax obligations of any business, sole traders included.

Do I need to register for VAT if I operate under a sole trader?

The sole trader needs to be registered for VAT in the Netherlands it the objects of activity of the company are charged with this tax.

Is the sole trader required to maintain accounting records?

The owner of the sole trader is required to keep accurate and appropriate business records. The books, as well as other accounting documents are recorded as per the current provisions and need to reflect a transparent situation (the true financial situation of the company).

For how many years do I need to maintain the accounting records?

As a sole trader, you are legally required to maintain the company’s records for a period of 7 years.

What social benefits do self-employed persons have?

One should know that self-employed individuals still have access to certain benefits. We summarize these below:

older and partially disabled formerly freelance or self-employed individuals can obtain income support for those professionals who are forced to close the sole trader;
allowance during pregnancy and after childbirth for female self-employed professionals;
childcare benefits for those sole traders whose child is attending a childcare facility;
assistance for starting one’s own business when the individuals has a long-term disability;
starting a company and at the same time retaining the unemployment benefit.

Can the sole trader obtain tax benefits?

Generally speaking, tax benefits are offered to those who run businesses under corporate entities, but in some cases, the sole trader can obtain certain tax benefits. In the list below, our Dutch lawyers outline the current conditions:

sole traders can qualify for tax benefits if they prove that they have worked for at least 1,225 hours per year for the business;
if this is the case, they can obtain a private business ownership allowance;
they can also benefit from a tax relief for new companies;
the sole trader is also allowed to apply for the small business scheme (which is available for various business forms in the Netherlands).

What are the qualification requirements for the small business scheme?

The small business scheme can be applied to a sole trader if the following conditions appear:

the company has a turnover below EUR 20,000 per year;
the company does not apply VAT;
the sole trader does not submit VAT declarations;
the business is not entitled to deduct VAT.

What do I have to do if I want/need to close the sole trader?

The entity must be deregistered with the Business Register. Before that, it is necessary to settle any tax issues and obligations with the Tax Administration. While the process is less complex compared to a limited liability company or a joint stock company, it still involves a set of procedures which is why we recommend you address our Dutch lawyers for assistance.

How many sole traders are in the Netherlands?

If you plan to open a sole trader in the Netherlands, please mind that this entity is quite popular here. For instance, in 2020, there were around 1,2 million sole traders and, at the level of the 2026 (the first quarter of the year), there are more than 1,6 million.

Contact our law firm if you want to work as an entrepreneur in the Netherlands.