Entrepreneurs hardly change their legal form
Once entrepreneurs have chosen a legal form, they rarely change it. This is the conclusion of a study by the Central Planning Bureau (CPB). Only ib entrepreneurs with a higher income sometimes switch to another legal form.
In a so-called Policy Brief, the CPB looked at the tax burden of persons who, for income tax purposes, are considered entrepreneurs (ib entrepreneurs) and director-major shareholders. The legal form of companies between 2007 and 2014 was considered. The first choice for a legal form often turns out to be the definitive choice.
From ib to dga
Data from the Central Bureau of Statistics show that 1 percent of ib entrepreneurs became dga three years later. For incomes above 75,000 euros, that percentage is higher: 3 percent. The reverse path is mainly taken by dgas with an income of up to 75,000 euros: 5 percent of them choose to continue as an ib entrepreneur. That decreases quickly with higher incomes.
The choice to switch to a different legal form for company depends on many factors. In addition to tax motives, risk and liability, cost considerations such as administration, pension and capital accumulation and business succession also play a role.