Sole Proprietorship or Company in Belgium: How to Choose?

The Fundamental Choice for Every Entrepreneur

When launching a business in Belgium, one of the first decisions to make is your legal form. Two main options are available: operating as a sole proprietorship (natural person) or creating a company (legal entity). This choice has major implications for your taxation, liability, and credibility.

The Sole Proprietorship (Natural Person)

Advantages

• Simple creation: registration at the CBE through an accredited business counter, no notarial deed
• Low start-up costs: approximately EUR 90-150 for CBE registration and VAT activation
• Simplified accounting: single-entry bookkeeping for small businesses
• No minimum capital: you start with your own resources
• Flexible management: you make all decisions alone, without formalism

Disadvantages

• Unlimited liability: your personal assets are at stake for professional debts
• Progressive taxation: taxed under personal income tax (PIT) with progressive rates from 25% to 50%
• High social contributions: approximately 20.5% on net income, calculated quarterly
• Limited credibility: some partners or clients prefer dealing with a company
• Difficult transfer: the business cannot be sold or transferred as such

Tax Regime

Sole proprietorship income is taxed under PIT according to progressive brackets (2026 tax year):

On top of this come municipal surcharges (6-9% depending on the municipality) and social contributions of approximately 20.5%.

The Company (Primarily SRL)

Advantages

• Limited liability: your personal assets are protected (except in cases of gross negligence)
• Fixed tax rate: corporate tax at 25%, reduced to 20% for SMEs on the first EUR 100,000 of profit
• Tax optimisation: ability to remunerate through salary, dividends, benefits in kind
• Enhanced credibility: more professional image with partners
• Continuity and transfer: the company can be sold, transferred, or welcome new partners

Disadvantages

• Creation costs: notary fees (approximately EUR 1,000-1,500), financial plan, publication in the Official Gazette
• Accounting obligations: double-entry bookkeeping mandatory, annual accounts to be filed
• Formalism: general meetings, minutes, UBO register
• Minimum remuneration: to benefit from the reduced SME rate, the director must pay themselves a minimum remuneration of EUR 45,000 (or at least equal to taxable profit if lower)

When to Switch to a Company?

Switching to a company generally becomes beneficial when:

• Your net profit exceeds EUR 40,000-50,000 per year
• You want to protect your personal assets
• You need credibility with major clients
• You plan to welcome partners or investors
• You want to optimise your remuneration (salary/dividend mix)

Comparison Table

Conclusion

Unsure whether to choose a sole proprietorship or company? LegalBelgique carries out a personalised study of your situation to recommend the most suitable legal form. Our experts analyse your taxation, risk level, and objectives to guide you towards the best choice. Schedule an appointment today!