Tax-neutral contribution

If your sole proprietorship or general partnership (box 1 enterprise) is doing well and you want some extra security or a more professional appearance, it is often advisable — together with your accountant — to convert your sole proprietorship or partnership into a BV structure. While limiting liability is an important factor in this decision, tax considerations also play a role.

When continuing the sole proprietorship or partnership, it could be contributed to a BV structure. This contribution can be either taxable (ruisende inbreng) or tax-neutral (geruisloze inbreng). If you opt for a taxable contribution, you will have to pay tax on the cessation profit — the difference between the book value of the assets of the sole proprietorship or partnership and their actual value. This profit is taxed in box 1. This means that tax is due on the built-up value of your business, such as hidden reserves, fiscal reserves, and especially the not yet activated goodwill. If your current enterprise is successful, the tariff will be fifty percent (50%) tax payable in one time!

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Often, it is undesirable to pay tax on the cessation profit. That’s why there are tax facilities that allow you to contribute your sole proprietorship or partnership tax-free. This is called a tax-neutral contribution (geruisloze inbreng), which means that the business is deemed not to have ceased. The tax claim is effectively deferred to the BV. In other words, the personal income tax claim is converted into a corporate income tax and personal income tax claim.

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The notary will prepare a deed of incorporation for you in which the sole proprietorship or partnership is contributed tax-free into the BV structure. Because we work with a safe IT-portal, we can handle this completely online for you.