Will switching from a sole proprietorship to a corporation still be worthwhile after 2026?

As of January 1, 2026, the tax rules for corporations have been tightened.

These changes may be relevant if you want to incorporate your sole proprietorship.

Reduced rate.

The income from your sole proprietorship is taxed at a progressive rate of 50% (+ municipal tax) on the portion of income above approximately €50,000. A corporation pays only 25% on its total income and, under certain conditions, as little as 20% on the first €100,000.

Conditions have been tightened.

One of the conditions for the reduced tax rate is that at least one company executive must be paid the minimum wage. Until now, this minimum wage has generally been €45,000, but starting with the 2026 tax year, it will be increased to €50,000 and will be indexed annually.

Furthermore, a company is now ineligible for the reduced rate if more than 20% of its executive compensation consists of benefits-in-kind valued on a flat-rate basis, such as a company car or housing allowance.

Reduced withholding tax (rv).

A company’s profits may be distributed as dividends. Normally, a 30% withholding tax is due on these dividends.

Under certain conditions, it is possible to apply lower withholding tax rates. VVPR-bis dividends are often used as a tax-efficient way to distribute dividends. The current rate is 15%, but it has since been increased to 18%.

Conclusion.

The increase in the minimum remuneration and the change (increase) in the RV rate under the VVPR-bis regime are factors to consider if you are thinking about switching to a corporation. It’s worth calculating whether the switch would be beneficial in your case. There are several factors to consider. We’d be happy to help you assess your situation.