Sooner or later, every Belgian freelancer asks themselves: should I stay a sole proprietor (zelfstandige/independent) or switch to a company (BV/SRL)? The answer depends on your income, personal situation, and several tax factors most people don't calculate correctly.
In this practical guide, we demystify the topic without jargon. You'll know exactly when the switch becomes profitable, what it costs, and how to evaluate your situation.
The two legal forms in brief
Sole proprietor (zelfstandige / independent)
- You are the business. No legal separation.
- Quick setup (1-3 days), minimal cost (~€100 via business one-stop shop).
- Your income is taxed at your personal income tax: 25%, 40%, 45%, or 50% depending on the bracket.
- Unlimited liability: your business debts can affect your personal assets.
BV/SRL company (limited liability company)
- Separate legal entity from you.
- More complex setup: notary, financial plan, separate accounts (~€1,000-2,500).
- Corporate tax rate: 20% up to €100,000 (SME), then 25%.
- You pay yourself a salary (taxed at personal income tax) or dividends (taxed at 15% or 30% depending on liquidation reserve).
- Limited liability to the contribution: your personal assets are protected.
The tipping point: at what income does it become profitable?
The common rule in Belgian accounting circles: switching becomes interesting from €60,000 to €80,000 in net annual profit.
Why? Because below that, tax savings don't offset the structural costs of a company (accountant, contributions, formalities).
Example — €50,000 annual profit
As a sole proprietor:
- Social contributions: ~€10,250 (20.5%)
- Progressive income tax: ~€13,500
- Municipal tax (7%): ~€945
- Total levies: ~€24,700 → Net: ~€25,300
Via BV company:
- If you pay yourself a €45,000 salary
- Corporate tax on remaining profit (€5,000): €1,000 (20%)
- Contributions on salary + IPP: similar
- Additional company costs: €2,500 (accountant, fees)
- Net saving: almost zero, possibly slightly negative
Example — €100,000 annual profit
As a sole proprietor:
- Social contributions: ~€20,500
- Progressive tax (including 50% bracket): ~€32,000
- Municipal tax: ~€2,240
- Total levies: ~€54,740 → Net: ~€45,260
Via BV (with salary + dividend strategy):
- €45,000 salary taxed at IPP: ~€15,000 tax
- Company profit €55,000 × 20% = €11,000
- Dividend via liquidation reserve (15% after 5 years): ~€6,600
- Company fees: ~€2,500
- Total levies: ~€35,000 → Net: ~€65,000
At this income level, switching to a company saves ~€20,000/year. That's significant.
The 5 signs it's time to switch to a company
1. Your profits consistently exceed €70,000
Not an isolated good quarter — an average over 12-24 months. A company involves commitments that aren't easily undone.
2. You want to reinvest in your business
In a company, you can keep profits in the business to buy equipment, hire staff, expand. As a sole proprietor, you're personally taxed on everything you earn, even if you don't withdraw it.
3. Your activity carries risks
Construction, technical consulting, B2B contract software development: if a client sues you, your personal assets are exposed as a sole proprietor. The BV protects you.
4. You're considering hiring
Managing employees as a sole proprietor is possible but cumbersome. In a company, it's the natural framework.
5. You're considering selling your business one day
Selling a company means selling shares. Selling a sole proprietor activity is nearly impossible without restructuring everything.
The 4 pitfalls to avoid when switching
1. Forgetting "company director social contributions"
In a company, you contribute differently than sole proprietors. The annual minimum is higher. Budget for it.
2. Not preparing the mandatory "financial plan"
To create a BV, the law requires a realistic 2-year financial plan. If the company goes bankrupt within the first 3 years and the plan was clearly insufficient, the founder can be held personally liable.
3. Underestimating annual recurring costs
Accountant (mandatory for companies): €1,500-3,000/year. Annual accounts filing: €150-300. Heavier VAT formalities.
4. Confusing "company income" and "personal income"
Company money is not yours. You can only withdraw it via salary (taxed at IPP) or dividend (taxed 15-30%). Using company funds for personal expenses is a taxable "benefit in kind."
Intermediate alternatives
Before switching to a BV, consider:
- VAPZ/PLCI (supplementary free pension): deductible up to ~€3,960/year. Lowers your taxation without changing status.
- Optimizing deductible expenses: many sole proprietors under-report professional expenses. Don't lie, but don't leave anything on the table.
- "1-euro BV" form (new law): option to create a BV without minimum capital — reduces entry cost.
How to decide: the 5-question checklist
- Are my stable net profits above €70,000?
- Can I absorb €2,500-3,500 in additional annual recurring costs?
- Does my activity carry financial or legal risk to my personal assets?
- Do I need to reinvest in my business (equipment, hiring, expansion)?
- Do I have the administrative discipline required (accountant, meetings, filings)?
If you answer "yes" to at least 3 out of 5 questions, a company becomes relevant. If it's 1 or 2 "yes", stay a sole proprietor and optimize what you have.
Our recommendation
Never switch to a company to "look serious" or because a colleague did. The decision must be purely financial and legal, based on your real numbers.
Before deciding, talk to your accountant. Ask for a numbered simulation on your specific situation, not generalities. A good accountant will tell you honestly if it's relevant — not to sell you additional services.
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This guide is informational. For such an important decision, always consult a qualified Belgian accountant or tax advisor. The numbers quoted are estimates as examples — your personal situation may differ significantly.