A sole trader represents the simplest way to carry a business activity. This business form can be set up by a single businessman, who carries the company’s activities in his or her own name. It is necessary to know that, regardless of the jurisdiction in which the sole trader is set up, there is no legal distinction between the company’s founder and the company itself, but the sole trader has the advantage of complying with less accountancy requirements, thus dealing with fewer bureaucracy matters.
In Thailand for example, the sole trader can only be set up by Thai nationals. However, there is an exemption in this sense, which allows foreigners to register as sole traders only if they are covered by the United States – Thailand Treaty of Amity and Economic Cooperation. Another way to start a sole trader as a foreigner in Thailand is if the person is married to a local citizen.
Just like in other countries, the Thai sole trader will be taxed following the personal income tax applicable in the country and it will also be required to pay value added tax for the goods and services traded on the local market.
The payment of the above mentioned taxes is also required for sole proprietorships registered in the Netherlands, and the rates at which these taxes are paid are established by the Dutch Tax and Customs Administration. In order to open a Dutch sole trader, the investor will have to register with the Netherlands Chamber of Commerce, which will allow the natural person to enter commercial activities. The sole trader registered here is also not required to comply with specific bookkeeping activities; as a general rule, the Dutch businesses keep the track of their transactions in Excel sheets.
However, in other European countries, the legislation concerning the sole trader is less flexible, as it is the case of Germany. For example, in this country, the sole trader is required to pay the income tax, the solidarity surcharge and the local business tax; these taxes are not due only in the situation in which the company’s owner registers the sole trader as a self-employed activity – which can be the case of persons who have a certain degree (lawyers, artists, consultants, writers and doctors for example) and who carry their activities through this business form.
Foreigners may also register a sole trader in Germany and operate as freelancers, but it is necessary to own a residence permit and to register with the local tax authorities.