You want to be or are already what we call in the Netherlands a ZZP’er or ZZP – Zelfstandigen Zonder Personeel – that literally means a self-employed professional without staff.
In other words, you are your own boss and your company employs no one.
But what does that mean in concrete legal and administrative terms? What is the legal form you can or should choose when starting your freelance business and why? Can you carry out several activities as a freelancer? Can you even hire staff? And are there any specific situations that would allow you to do business without any legal company?
Let’s see if we can shed some light on all those questions for you!
- General ZZP principles and why you should start with an eenmanszaak
- Tips for ZZP: hiring, special benefits, exceptions.
- The future of the ZZP “status”
General ZZP principles and why you should start with an eenmanszaak
That being said, ZZP is not technically a legal status or form. This is just a common acronym used in the Netherlands to categorize the entrepreneurs who do not have any employee.
Therefore, when becoming a ZZP you cannot choose the “ZZP” legal form or status because it just does not exist.
Instead, you have to opt for a proper legal form.
When starting their activity in the Netherlands most freelancers opt for a sole proprietorship or eenmanszaak (literally meaning “One-man business“) as a legal form and there are several reasons for that.
You could also start with a BV – besloten vennootschap or private limited company – but there are a number of benefits with a sole proprietorship.
First of all, it is quite quick and easy to set it up – check our post how to become a freelancer in the Netherlands if you are not one already – and it’s one of the simplest legal forms to start with.
When you start being a freelancer, keeping things as simple as possible and avoiding administrative complexity is key. This is one of the reasons why an eenmanszaak is great to start with.
Second, with a sole proprietorship / eenmanszaak, you can often get more tax benefits than you are entitled to with a private limited company – Besloten Vennootschap or BV– especially in the early years.
Those various tax facilities that are possible to get when you run an eenmanszaak can be extremely beneficial and allow you to start without having the immediate pressure to sign significant deals in order to be profitable enough and earn a decent living.
Consequently, it is highly recommended to start with an eenmanszaak, especially during the first years if you intend to start slow and do not expect a great volume of orders right after your registration at the KVK.
Now, the main drawback of establishing yourself as a sole proprietor compared to a BV owner is that you are personally liable for your business debts.
Because when you run an eenmanszaak you are not a legal entity, therefore there is no difference between your business and personal assets: from a liability and financial perspective, yourself as the owner of your freelance business and yourself as a person outside your business are the same.
Your company and yoursef as his/her owner are legally the same.
So in extreme cases, for example if you have decided to contract risky debts and are not able to bear the costs of them anymore in spite of decent business revenues, your creditors are allowed to make a claim on your personal assets.
Again, such cases are extreme and those situations might occur when you take for example significant risks or run a business requiring a lot of investments and things just did not go the way you initially planned.
But in most cases and unless it is necessary for your business, you do not have to contract debts and put your business and personal assets at risk.
Furthermore, you can always take out additional insurances – if you need it – to protect yourself and your business at most even though it will not necessarily insure you against debt and bankruptcy.
The ZZP tips: number of companies, hiring, special benefits, and exceptions
- You can set up only one single eenmanszaak / you cannot run several sole proprietorships.
Because there is no difference between your private and business assets a court ruling came out with the following decision: “registering several sole proprietorships per person in the trade register is contrary to the purpose and purport of the Trade Register Act”.
However, you can operate under different trade names, and carry out various commercial activities and even work from multiple premises.
If your freelance business starts growing through additional activities or if you have decided to diversify your services, you can actually register brand new activities online with the KVK.
- Can I hire interns as a ZZP? Yes! Remember, ZZP exactly means “Zelfstandigen Zonder Personeel” and Personeel/staff is to be understood as yhere.
Although the eenmanszaak is a simple one-man-business legal form, it does not indeed prevent you from employing interns.
Now there are 2 sub cases.
- Your intern is Dutch
If your future intern is Dutch you will have to apply by the conditions of the university the student and fill out a specific form provided by the tax authorities – Belastingdienst – in order to register this “recruitment”.
Then the Belastingdienst will give you a number to display on the payslips of your intern.
- Your intern comes from another EU country
Usually a training agreement provided by the school/organization to which the intern belongs is sufficient as a contract.
In both cases, once your intern and you as a freelancer have co-signed it, you just need to declare this recruitment to the Belastingdienst by filling out this form and they will provide you with an employer number that you have to mention on the pay slips of your intern.
As far as the pay is concerned, your intern’s compensation is not taxable as long as the internship lasts less than 6 months.
- Other benefits and exceptions
You can also start being a freelancer in the Netherlands with the eenmanszaak legal form while keeping all or part of your unemployment benefit if you currently are unemployed, or as an innovative startup.
All in all, the number of possibilities and benefits you can get with a sole proprietorship when you start being a freelancer in the Netherlands is really amazing.
Administration is easy – do not be afraid, really.
And as long as your accountant takes care of declaring your taxes, there is barely anything you have to do.
Anybody who has been dealing with administrative puzzles of other countries would say that setting up as a freelancer in the Netherlands is kid’s stuff. Bedankt Nederland!
In addition, unless you contract hazardous debts that you cannot honor any longer, take significant risks or lose a major trial, there is hardly any chance for you to put your belongings at risk while being a ZZP in the Netherlands under an eenmanszaak.
One of the only common “risks” that all freelancers face when running a sole proprietorship is not to declare and pay your taxes on time.
Usually, freelancers who do not declare and pay their VAT tax – as a ZZP you need to do it 4 times a year, each time per quater – receive a letter from the Belastingdienst asking them to pay an estimated amount for omitting – voluntarily or not – to declare and pay the VAT.
Some freelancers have even reported of being asked to pay more than 5000€ by the tax authorities! One reason to be serious enough about your tax declaration and payment 😀
That being said, if this happens to you, don’t panick! The best to do is simply to contact the Belastingdienst – prefereably via phone and through your accountant – in order to clarify the situation and demonstrate your good faith to them. The few freelancers we know who were concerned by this case eventually ended with paying a small fine – less than a hundred euros – for not declaring their taxes within the defined period.
All of this to say that we can’t recommend you more to work with a reliable accountant 🙂
BV vs. Eenmanszaak and the probable future of the ZZP “status”
After reading all of the above information, if you still hesitate between starting with a sole proprietorship – eenmanszaak – or a private limited company – Besloten Vennootschap or BV – you should ask yourself the following:
- Is liability a crucial aspect of your business? / Does your business involve taking actions that could be judged as too risky if you had no limited liability?
Because a BV is a legal entity whereas a sole proprietorship isn’t , the BV bears the full liability in principle.
This means with a BV you are usually not personnaly liable for the debts of your BV: your personal assets cannot theoretically be affected by your business actions.
- Do you really need a solid structure or can you start with something simple? / Do you expect a great volume of various clients and orders during your first year(s)?
If so a BV may indeed be more appropriate to run your business.
With a sole proprietorship or eenmanszaak, you can get tax benefits for low profits that are more interesting compared to the tax you would have to pay with a BV on low profits.
Instead, a BV is more attractive for higher profits.
Why? Because with higher profits the tariff advantage of a BV is greater than the additional deductibility of a sole proprietorship – the tax facilities you can get as a freelancer.
Furthermore, depending on the type of business that you run, the suppliers and clients you deal with and how you see your business growing, the image, status or just the ability to sell or transfer your company are additional reasons why you could decide to opt for a BV.
- Would you be able to carry the costs that a BV involves?
If a BV is probably heavier than an eenmanszaak from an administrative perspective, it is also the case from a financial point of view.
In fact, with a BV you have to be aware that annual accounts and audit fees are part of your administrative costs.
Besides, if you run a BV, you as the director-major shareholder (dga) of your own private company pays income tax on your tax minimum wage and on the possible dividend paid out.
And on top of that comes the corporate income tax.
That’s a lot, huh? ^^
Some experts even recommend to select a BV instead of a sole proprietorship if your business generates a minimum profit of 150K€/year.
That’s why we always advise you to choose simplicity over complexity. See big but start small and you’ll be fine 😉
In case all of this still sounds a bit blurry for you, here is a quick table summary highlighting the main differences between an eenmanszaak and a BV.
- What about the Future?
Well not sure what we can say about what’s going to happen for freelancers in the Netherlands but what can do however is take a quick look at what happened over the last few years.
So here is a comparison of the creation of eenmanszaaks and BV over the last 4 years.
As you can see by yourself:
- The number of sole proprietorships has clearly been continuously rising. You can even see the full graph of the number of eenmanszaaks created just below, no matter the sector in which they operate.
- There are nowadays three times as many sole proprietorships as private limited companies.
Does that mean that there are more freelancers in the Netherlands under an eensmanzaak than a BV?
Yes but that has not always been the case.
According to ZP Facts who are a market monitor for independent professionals in business service, approximately 40% of freelancers opted for a BV / private limited company in 2007 and 2008.
In the years that followed this proportion continuously dropped.
Guess why? The crisis of 2008 did no good.
Because of the simultaneous decrease in working hours and hourly rates, freelancers faced rising uncertainty with their annual results.
And as we previously said, some experts such as ZP Facts recommend you to start a BV if you can generate a minimum profit of 150K€ a year.
Therefore, the numbers of freelancers who registered at the KVK under a BV kept falling in spite of measures that were taken to boost the attractively and popularity of that business form: the “Flex-BV” was for example launched in 2012 in order to make rules and duties more flexible and was supposed to provide a stimulus to the Dutch economy.
Apparently, this has had some positive impact on the numbers of created BV in the following years.
However, in 2015 one could observe that more than two thirds of the ZZP were registered under a sole proprietorship, 31.5% under a BV.
Today the proportion of freelancers registering under an eenmanszaak is about more than 75%!
Now the future will tell us in which direction the economy goes but it seems that this percentage is likely to keep on growing: with the reform of the DBA plus the major and increasingly important role of ZZP in the Dutch economy, the eensmanzaak will certainly keep on attracting a lot of focus and efforts to stimulate entrepreneurship in the Netherlands.
Dear readers, that’s ALL for the ZZP status! 🙂
If you’re a ZZP and own a BV just tell us how you feel managing it, what it implies and why you made that choice J Are you satisfied with it? Or would you consider switching back to the common eenmanszaak?
Cheers and Have Fun!