Visiting illegal prostitutes will be punishable by up to six months in jail if cabinet plans to reform the law on prostitution go through.
In addition, all companies involved in the sex industry – from escort bureaus and sex theatres to massage salons – will have to get an official licence to operate. At the moment only brothels require licences.
Local councils will also be able to say where and if sex companies can be situated.
The proposals, drawn up by home affairs minister Guusje ter Horst and justice minister Ernst Hirsch Ballin, have been circulated to police, justice ministry officials, the tax office and other interested parties for their comments.
The ministers say the new legislation is aimed at improving regulation, cutting crime and stamping out people trafficking.
The proposal does not include a rise in the minimum age for prostitutes from 18 to 21, but this still may be an option, the ministers said.