U.S. Expat Business in the Netherlands: Eenmanszaak, BV, or U.S. LLC?

You have moved to the Netherlands and want to invoice clients as a freelancer. Should you register an eenmanszaak, form a Dutch BV, or continue billing through a U.S. LLC? The answer involves legal liability, local registration and payroll as well as the U.S. tax treatment of income and any foreign entity.

This guide identifies questions for U.S. citizens and resident aliens. It is educational, not Dutch legal, immigration or tax advice. Work with a Dutch tax adviser and, for entity formation, the appropriate local professional; complex U.S. company and treaty positions may require an international tax specialist.

Compare the starting points

The Dutch government describes business legal structures and distinguishes an eenmanszaak from a BV. The BV has separate legal personality, but directors or shareholders can still face liability in particular circumstances. “Freelancer” or zzp'er describes working independently; it is not itself a legal form.

Operating as an eenmanszaak

Ask a Dutch adviser about Chamber of Commerce registration, VAT, local deductions, insurance and how the particular work is classified. Keep client contracts, gross receipts, fees, ordinary business expenses, invoices and work locations. Reconcile the local business records with your U.S. return using a documented exchange-rate method.

A U.S. person operating a service business directly may have Schedule C reporting, depending on the arrangement. See the IRS Schedule C instructions. Do not assume the Dutch net income calculation and the U.S. calculation are identical.

Forming a Dutch BV

A BV is a legal entity with shares and directors. The Dutch government's BV guidance discusses formation, the shareholder register and the customary-salary rules that may apply to a director and major shareholder. An individual assessment is needed: ask your adviser about salary, payroll, company income tax, dividends, VAT and annual accounts before using a low-salary scenario in a tax comparison.

For the U.S. return, first establish the BV's U.S. federal classification under applicable law, ownership and any election. If treated as a foreign corporation, Form 5471 may apply to a U.S. person who meets a filing category. Direct, indirect and constructive ownership, changes in ownership and the tax year matter. A controlled foreign corporation can also create current U.S. inclusion questions for certain shareholders even when no dividend is paid. Do not assume every owner must file the same form or that retaining cash removes U.S. obligations.

Continuing a U.S. LLC after moving

Collect the U.S. formation record, operating agreement, ownership details, U.S. tax elections, customer contracts and a map of where you work and manage the business. A U.S. classification does not automatically govern Dutch treatment. Ask a Dutch adviser whether the company must register locally, whether it has local tax obligations, and whether the same income is taxed at the individual or entity level. Differences between the two systems can complicate the foreign tax credit and the timing of income.

FEIE, foreign tax credit and social security

The FEIE requires qualifying foreign earned income, a foreign tax home and the applicable presence or residence test. A Dutch registration or residence permit alone does not settle eligibility. Salary for services, dividends and business profit need separate analysis. A foreign tax credit can reduce double taxation in qualifying cases, but eligible taxes, source, category, timing and statutory limitations matter; relief is not guaranteed.

The U.S.–Netherlands social security agreement may affect coverage for particular employment or self-employment. Review the work arrangement and applicable certificate with the relevant authority instead of assuming that paying Dutch contributions automatically removes U.S. liability. See SSA's international agreement resources.

Build the comparison before you decide

1. List your residence dates, services, client contracts and actual work locations.
2. Compare personal liability and Dutch registration, VAT, payroll and professional costs for each structure.
3. Model reasonable expected owner pay, retained profits and distributions with local and U.S. advisers.
4. Check U.S. ownership reporting and foreign corporation rules for the correct year; identify any specialist referral.
5. Preserve the original formation documents, annual accounts, tax assessments and evidence of exchange rates.

Need help identifying the U.S. reporting questions? Send FileAbroad a foreign-company inquiry. Describe broad facts without uploading sensitive records. Accepted preparation is separately scoped and priced; Dutch advice and advanced entity planning may require a local or international specialist.

Official sources

• Netherlands: Overview of business structures
• Netherlands: Private limited company (BV)
• IRS: Form 5471 instructions
• IRS: Foreign tax credit
• SSA: International agreements