BV starts to make sense from about 100K turnover because you gain some tax advantages, it also makes working for larger entities easier and it allows you to charge a higher rate and to be in an easier position to work with subcontractors. It all depends on what you want, there are plenty of ZZP'ers in software development on the low end, but most of the high end will be through BV's.
As far as I know, and I am happy to be corrected by somebody more knowledgeable, the famous Dutch ZZP'ers are tolerated. There is in the Dutch Law not a clarification of their legal and tax position:
So there's nothing to "tolerate" but money. ;)
Both have more or less the same tax and structural advantage (like limited liability, a far easier time to get acknowledged by social security, etc)
The main difference is capital requirements and more formality for the AG. For example: The law requires yearly external audits for an AG, while that's not necessarily the case for a GmbH.
Does Holland also make such a difference, or is BV the only such corporate form?
Note: Differences listed apply for Switzerland. It could be different in Germany.
Private limited company (BV or besloten vennootschap)
or
Public limited company (NV or naamloze vennootschap)
The BV is like a Ltd in the Anglo Saxon world and the NV is your company with equity defined by shares/stocks.
you can also have:
Cooperative (coöperatie)
Association (vereniging)
Foundation (stichting)
Nice overview(s) for Germany and most other countries with comparisons where appropriate.
Regarding the AG in Germany and required regular external auditing, in my university course where I learned about the charasteristics of the most common German legal entities [0], there was no such requirement listed or talked about, maybe that's only for Switzerland?
The GmbH on the other hand requires a minimum capital of 25.000€ and is expensive to form (from the course mentioned above >1.000€ in fees for notarizations etc.) which is one reason why the "UG (haftungsbeschränkt)" (essentially "baby's first GmbH") was established a while ago. A UG only has to have a minimum of 1€ in starting capital but has to
> "enlarge its capital by at least 25% of its annual net profit (with some adjustments), until the general minimum of €25,000 is reached (at which point the company may change its name for the more prestigious GmbH)."
Further reading: https://en.wikipedia.org/wiki/Entrepreneurial_company_(Germa... https://en.wikipedia.org/wiki/Gesellschaft_mit_beschr%C3%A4n...
[0]: as part of the subject "Finanzwirtschaft"/"Managerial finance?"
Forgot to insert the following link after the above sentence and can't edit anymore:
https://en.wikipedia.org/wiki/List_of_legal_entity_types_by_...
Also your threshold of 100K does not align with my accountant's, who said it was at least 200K to justify the added overhead.
- You work for yourself so you get 100% of the risk
- You have no benefits
- If you are sick you get no pay, unless you make a very expensive work sickness/income insurance
the Dutch tax office, judges that they do not want you to be in a "too advantageous fiscal position" ...( Not making this up...these are their own words) so, forces you to pay yourself a minimum yearly salary that is updated every year so they can tax you. It is currently at 47,000 EUR per year I believe...and is independently of you making money or not...
There is a fundamental principle here, and that is the tax office considering that, unlike a permanent employee who cannot be fired and has almost no liability, an entrepreneur, despite taking all the risk and having non of the benefits, is judged that it should be forced into the same tax position. Where is the upside then?
This coming from the same tax office, that has enabled some of the biggest tax dodgers in the planet:
"Netherlands earned €25 mil. from Google's tax avoidance"
https://nltimes.nl/2021/01/13/netherlands-earned-eu25-mil-go...
"Forget about the Gates Foundation. The world's biggest charity owns IKEA—and is devoted to interior design"
https://www.economist.com/business/2006/05/11/flat-pack-acco...
"Netherlands world's 4th biggest tax haven"
https://nltimes.nl/2021/03/09/netherlands-worlds-4th-biggest...
"The Netherlands is still one of the world's main tax havens, coming in fourth place on Tax Justice Network's biennial ranking of tax havens. Only the British Virgin Islands, the Cayman Islands and Bermuda scored worse than the Netherlands when it came to tax avoidance."