From record keeping to VAT and allowable deductions, here is everything you need to know about taxes for the self-employed in the Netherlands.
If you plan to run your own business, you will need to understand how the Dutch tax system works. This includes what taxes you will need to pay; which deductions you can make on your tax return; and what taxes you need to pay on any business premises you rent.
To help you, we explain everything you need to know in this guide, which includes the following information:
- Self-employed tax system in the Netherlands
- Self-employed income tax in the Netherlands
- Registering for self-employed tax in the Netherlands
- Self-employed tax deductions and credits in the Netherlands
- Corporate tax in the Netherlands
- How to file self-employed tax in the Netherlands
- VAT in the Netherlands for self-employed people
- Social security for self-employed workers in the Netherlands
- Combining freelance work and paid employment in the Netherlands
- Associations for entrepreneurs in the Netherlands
- Hiring an accountant or financial adviser
- Useful resources
Self-employed tax system in the Netherlands
Registering your company
If you intend to be a self-employed, a freelancer, or a business owner in the Netherlands, you will need to be on the Commercial Register to get a BTW (VAT) number. Your company will require this to pay tax. You will also need to register at the Tax Administration; whether you are starting a one-man business, professional partnership, or limited or general partnership.
Both registrations take place at the Dutch Chamber of Commerce (KvK) on the same day, in one prescheduled appointment. As soon as your company starts doing business in the Netherlands, you need to start paying taxes.
Note that doing your yearly taxes is slightly more complicated when you are a self-employed professional. This is mainly because you need to pay different taxes, therefore, be aware of the specificities.
Choosing a legal structure
When you start a business in the Netherlands, you need to choose a legal structure to operate. You will make this choice when you register your business at the Chamber of Commerce. It will also help determine such aspects as liability and tax obligations.
There are many possible business structures, with and without corporate (legal) personality. Which one suits you best depends on your circumstances.
Structures without legal personality
Some of the business structures without corporate (legal) personality are:
- Sole proprietor or sole trader (eenmanszaak): The most common business structure for a freelancer’s enterprise in the Netherlands. Setting up as a sole trader is quick and easy to do, and often offers more tax benefits than setting up a private limited company (BV); especially in the early years.
- General partnership (VOF or vennootschap onder firma): If you start a business with other self-employed individuals, one option may be to create a legal entity in the form of a general partnership. All partners bring equity into the VOF in the form of cash, goods, or labour; there is no minimum start-up capital requirement.
- Limited partnership (CV or commanditaire vennootschap): If you were thinking about setting up a general partnership, but were short on capital or a financial backer, then a limited partnership might be just the legal structure you are looking for. In a CV, your financial backer actually becomes a partner in your business. Then there will be two types of partners: a managing partner and a limited partner. The managing partner runs the day-to-day business, and the limited partner involves themself with the business’s financial affairs.
If you choose a business structure without legal personality, you will be personally liable for the debt of your company, with your private capital. This is usually not the case for a legal structure with legal personality.
It is important to mention that if you want to work as a self-employed professional (ZZP-er, in Dutch) or freelancer, you should be aware that none of these are legal structures. Therefore, when you register your business at the Chamber of Commerce, you have to choose to act as a sole proprietor or have a private limited company.
Structures with legal personality
The main legal structure with corporate (legal) personality is:
- Private limited company (BV or besloten vennootschap): The tax authorities consider your business an autonomous entity. This means that the BV is generally speaking liable for any debts; rather than you as an individual. As a director, you are an employee of the BV and you act on its behalf. It is possible to set up a BV on your own or with other individuals and/or legal entities. If you own more than 5% of your company’s shares, you a ‘director and major shareholder’ (DGA). As a DGA, you will have to pay income tax on your salary and perhaps dividend tax. Your BV will also have to pay corporation tax (vennootschapsbelasting, VPB) over its profits.
When you choose a legal structure with legal personality, you need to have a civil law notary draw up the relevant papers; including your registration at the Netherlands Chamber of Commerce (KVK).
Read more in our Guide to starting a business in the Netherlands.
Self-employed income tax in the Netherlands
The Tax Administration applies various criteria to determine whether you are an entrepreneur; such as the number of clients your business has, the activities it performs, whether it makes profit and how much, and so on. If you meet these criteria, you will have to pay income tax.
Tax for self-employed sole traders and freelancers in the Netherlands
Self-employed professionals (zelfstandigen zonder personeel – ZZP) qualifying as entrepreneurs can choose to use a sole proprietorship (eenmanszaak) to perform their activities. This means that your business is not a legal corporate entity and no difference is made between your personal and business assets. Therefore, you will have to pay income tax on your business’s profits.
Profits from your sole proprietorship are taxed under the Box 1 – Taxable income from employment and home-ownership. Also, if the Dutch Tax Administration recognizes you as a business owner, and you meet a minimum working-hour requirement, you can enjoy certain tax benefits.
Tax for partnerships in the Netherlands
In a partnership, each partner pays income tax on his/her own share of the profits, as if it was earned directly. Each partner is seen as an individual self-employed and may be able to enjoy certain tax benefits and exemptions. This might be an entrepreneur allowance, investment allowance for environmental investments or small projects, or a tax-deferred retirement reserve.
Tax on limited companies in the Netherlands
Having a limited liability company as a self-employed entrepreneur or freelancer, such as a Dutch B.V., means that you are an employee of your own company. Therefore, the B.V. has to pay corporate-dividend tax and wage tax to the Dutch tax authorities for you as an employee.
A limited company is not viewed as being in business, therefore it is not entitled to the entrepreneur allowance. It is only entitled to tax breaks for investments, such as ‘discretionary depreciation’ and ‘investment allowance’.
As an entrepreneur, you will receive an invitation from the Dutch tax authorities to fill your income/corporate tax return.
Registering for self-employed tax in the Netherlands
If you independently supply goods or services to other parties to make a profit, you need to register your business in the Dutch Chamber of Commerce (KvK).
To register a new sole proprietorship, a professional partnership (maatschap), a general partnership (VOF), or a limited partnership (CV), you must complete an online registration form and schedule an appointment with the Chamber of Commerce through its website.
For your visit to the Chamber of Commerce, you must bring a valid identification document, your BSN number, and pay a registration fee of €50. During the appointment, you will receive your Chamber of Commerce registration certificate and VAT number. Right after the registration, the Dutch tax authority is automatically informed by the Dutch Chamber of Commerce. They will then issue a definitive VAT-number that can be used for tax deductions, which may apply to your company.
When to register
It is possible to register your business with the Chamber of Commerce in three different timeframes:
- No later than one week after starting your business;
- One week prior to starting your business;
- Earlier. In that case, the registration (with Chamber of Commerce registration number) will become official one week prior to the start of your business.
Note that limited liability companies (B.V.) are more complex to start than non-limited liability companies (eenmanszaak, VOF); since you form a corporation together with a Dutch notary. In that case, we recommend you to consult a Dutch tax expert.
Self-employed tax deductions and credits in the Netherlands
As a freelancer/self-employed professional based in the Netherlands, you can qualify for tax facilities, subsidies, and benefits.
Tax deductions for freelancers
Costs for equipment, travel, marketing, legal, accountancy, and services from a third party can be deducted as business expenses. However, dinners, gifts, and study trip costs are only partially deductible. Clothes, fines, and personal devices and computers are not deductible. In case you need a car for your business, then you have two options. You can use your own private car for the business or put a car on the balance of the company.
Applying for facilities
As a non-limited liability company, self-employed entrepreneurs and freelancers can also apply for certain entrepreneur facilities such as investment allowance, tax-deferred retirement reserve, and entrepreneur allowance (tax credits), such as:
- Private business ownership allowance: (zelfstandigenaftrek): If you pay income tax in the Netherlands, you will be eligible as an entrepreneur, and this will reduce your taxable income;
- Tax relief for new companies (startersaftrek): is an increase in the private business ownership allowance intended for new businesses;
- Small business scheme (kleineondernemersregeling): If you are eligible for the small business scheme, you pay less VAT;
- Microcredit: is available for (start-up) businesses in need of a loan or guidance. This scheme consists of a loan of up to €50,000 and coaching;
- SME profit exemption (MKB-winstvrijstelling): is an allowable deduction for small and medium-sized enterprises. The number of hours you work for your business is irrelevant in this respect. After having deducted the allowances above from their profit, entrepreneurs are entitled to an extra 14% tax relief.
However, to fulfil the above-mentioned allowances, you have to meet the “hour criterion”: you have to be active for at least 1.225 hours a year (about 25 hours/week). This includes hours spent on travelling, market research, and administration. In your first year, it is smart to keep the administration of your working hours. Exceptions are made if you are pregnant, for example.
The entrepreneur allowances described above cannot be applied by a limited liability company.
The Dutch tax law includes specific rules when it comes to the depreciation of assets.
Regarding goodwill, the amortisation for tax purposes is limited to 10% of the purchase price per year. On the other hand, most investments (inventory such as computers, desks, equipment, and tools) have a maximum depreciation rate of 20%. The amortisation of the asset takes a maximum of 5 years. However, if the cost of your company asset is less than €450, you are allowed to deduct the entire amount from your earnings in your tax return.
Deductions when you work from home
If you are renting business premises, the costs you pay are tax-deductible. If you work from home, however, things can get more complicated, and you will only be able to deduct costs if the following applies:
- Your office space is in an independent part of the house (some specific criteria are required by the tax administration);
- At least 70% of your income is earned there (if you also have an office elsewhere);
- At least 30% of your income is earned there (if you don’t have an office elsewhere).
Corporate tax in the Netherlands
If you have a private company with limited liability (besloten venoostschaap in Dutch; commonly shortened to BV), you will have to pay corporate tax and dividend tax. In the event you work as an employee in your own BV, your BV will have to deduct income tax for you and pay this to the Tax Administration.
Your BV will pay corporate tax over its profits; and you will be treated as a “director and major shareholder” (directeur-grootaandeelhouder, DGA), who will have to pay income tax on your salary and perhaps dividend tax. Paying yourself a salary from your BV is a relatively expensive option. A less expensive option (fiscally) is to pay out a dividend.
Besides, the Tax Administration won’t allow you to pay yourself an excessively low or zero salary. Your salary has to be in line with market levels, which means a minimum annual salary of €45,000.
Extension for filing income tax
A private company with limited liability can be included in the tax filers’ extension program. This provides an extension for filing the Dutch corporate income tax return. But for the VAT return and wage tax returns, it is not possible to arrange a special extension program with the Dutch tax authorities. The deadline to file the wage tax return is every month, and for the VAT is monthly, quarterly (most usual), or yearly.
How to file self-employed tax in the Netherlands
After you have registered your company with the Chamber of Commerce, the Tax Administration will determine for what taxation types you must submit returns. For income tax or corporate income tax, you must submit a tax return on an annual basis. For VAT tax, you submit a tax return on an annual, monthly, or quarterly basis. If you employ people, you must submit a tax return for payroll tax.
Furthermore, after your business registration, you will receive the required login data, so you can submit tax returns online through the Tax and Customs Administration website.
You may file the digital tax returns via:
- Mijn belastingdienst (only available in Dutch);
- Inloggen voor ondernemers (only available in Dutch);
- Tax return or accounts software.
You may also outsource your tax return work to an intermediary, such as a payroll manager, accountant, or tax consultant.
Filing a VAT return form
As an entrepreneur, you need to file a VAT return form usually quarterly; considering the year from January to December, no matter when you registered your business. You must complete a digital return form within 2 months after the end of the relevant period.
Even if you didn’t do any business in the Netherlands during a certain period, you must file a VAT return. After submitting it, if you are required to pay VAT, you have 2 months after the end of the relevant period to pay this. The payment date is taken as the date on which the payment is made into our bank account. However, if you think the amount of VAT you pay is an overestimate, you can apply for a refund on your tax return.
In addition, if you are registered with the Chamber of Commerce, even as an entrepreneur, you will receive a declaration letter to fill for income tax. If you have not received a letter, but are expecting to pay over €45 or get a refund of over €14, you should also file a tax return. You must fill your income tax return digitally before 1 May of each year.
Finally, the return for corporate income tax is filed annually, at the end of the company’s financial year. You must file your corporate income tax return digitally.
VAT in the Netherlands for self-employed people
If you run a business in the Netherlands, you may have to pay turnover tax (VAT). Therefore, the Value Added Tax (VAT) will be one of your main outgoings as a business. The VAT is paid either annually, monthly, or quarterly, depending on the type of business you have and your turnover.
It is compulsory for businesses to charge VAT when invoicing their clients, although there are some exceptions. If you teach educational courses or provide educational training, for example, you may be VAT exempt. Services provided by journalists, composers, and authors are also VAT exempt, as are medical services and products. You can find an extensive list of exempted professions, goods, and services under Vrijstellingen (only available in Dutch).
VAT rates for self-employed people
The VAT is charged at 21% or 9% depending on the type of product or service. The 9% tariff (the low tariff) is applied to many common products or services, such as food and drink, medicines, (e-)books, online publications, and magazines. For other products and services, you will pay the general (high) VAT rate of 21%.
The rate may be even 0% if you are trading internationally outside of the EU or supplying goods from the Netherlands to another EU country (cross-border transactions). If you do not charge VAT, you cannot offset it; therefore, you should check with the Tax Administration if you are unsure whether you need to charge VAT. The VAT you charge, which your client pays, must be given back to the Tax Administration, however VAT that you charge your suppliers can be offset against your return.
Special tax facility
A self-employed entrepreneur or freelancer who does not have large sums of VAT in their administration can apply for a special tax facility called “kleine ondernemersregeling” (small-sized entrepreneurs regulation). In that case, you will have to pay less VAT or no VAT at all. This regulation is only applicable to those who have a non-limited company (Eenmanszaak / CV / VOF). Besides, the VAT to be returned after reclaiming input VAT is less than €1,883 a year. In order to apply for this special tax facility, you need to file a request to the Dutch tax authorities.
New VAT number from 2020
After your registration, the Dutch Chamber of Commerce will immediately provide you with a VAT (BTW in Dutch) number; you will need to use this when informing the Tax Administration of your company’s income throughout the year.
Improved privacy protection
Towards the end of 2019, all self-employed professionals and freelancers (zzp-ers) in the Netherlands automatically received a new VAT number. This new number must be specifically used for your external contacts and must be displayed on your invoices and website. The new VAT number aims to better protect your privacy and reduce the risk of identity fraud.
So as of January 2020, self-employed professionals will have 2 numbers: the new VAT identification number (btw-id) and the old VAT tax number. The latter contains the citizen service number and you will use this in all correspondence with the Dutch Tax Administration.
Social security for self-employed workers in the Netherlands
Self-employed professionals in the Netherlands don’t have mandatory insurance for illness, invalidity, or unemployment. This means that they must make arrangements for these kinds of social insurances themselves if they want to receive any of those benefits. On the other hand, national insurance schemes (social security) apply to them; mainly because these schemes are compulsory for everyone working or living in the Netherlands. Freelancers and self-employed professionals in the Netherlands pay national insurance contributions through their income tax.
All residents in the Netherlands need to pay a premium of around €1,300 per year for basic health insurance, however entrepreneurs and freelancers also need to pay an income-related contribution. This contribution is on top of the premium that you pay to your health care insurer of your choice. The higher your income, the higher your contribution will be. You pay the contribution by means of a tax return. You can receive a health care allowance from the government (zorgtoeslag) if your income is below a certain level.
Freelancers and self-employed professionals may take out voluntary insurances against some business risks with an insurance company.
Find out more in our Guide to health insurance in the Netherlands.
Combining freelance work and paid employment in the Netherlands
If you combine freelance work and paid employment, the authorities consider you a part-time entrepreneur. In the Netherlands, part-time entrepreneurs are under the same rules as full-time entrepreneurs.
It is important to note that if you start your business in addition to your job, you must discuss your plans with your employer. Sometimes, it will be necessary to deal with a non-compete or a non-solicitation clause. Even when you leave the company, these clauses may still apply temporarily. If you have a fixed-term contract, your employer may only include such clauses in extraordinary circumstances.
Small business scheme
Furthermore, being a part-time entrepreneur means that you will have to deal with both VAT and income tax. However, if you only pay a small amount of VAT annually, you may qualify for the small business scheme; this means that you may pay less VAT (or no VAT at all) on your return.
You can also apply for some extra allowable deductions if you:
- Work at least 1,225 hours in your company annually;
- Spend more than 50% of your working hours in your company;
- The Dutch Tax Administration (Belastingdienst) considers you as an entrepreneur who qualifies for income tax.
Working for clients
If you are doing long-term freelance work for clients, they need to know whether the Dutch Tax Administration regards you as an entrepreneur. Otherwise, they may have to pay income tax and insurance contributions for you. In this case, you can prove that you are truly an entrepreneur with a model agreement. In fact, freelancers and self-employed professionals and their clients can choose to work according to 3 different kinds of standard model agreements.
Associations for entrepreneurs in the Netherlands
There are associations for specific branches and special interest groups for young entrepreneurs, female entrepreneurs, or entrepreneurs with a non-Dutch background. The Chambers of Commerce provides information in English on such organisations and associations in your area.
Additionally, the governmental website Business.com.nl provides a list with several Dutch organisations which provide information (mostly in Dutch only) for freelancers/self-employed professionals, such as Freelancers Association (for journalists), VZZP (Association of Self-employed Workers Without Employees), Kunstenbond (creative sector), PZO (Platform for Independent Entrepreneurs), and so on.
Hiring an accountant or financial adviser
One thing is for sure: the Dutch tax system is hard to understand – even for Dutch citizens! This is why hiring an accountant or financial adviser can be a great investment. A good English-speaking financial adviser can offer you customized services; helping with everything from choosing the best type of business for you and explaining the taxation types that come with it, to filing your income and VAT taxes returns correctly.
How to find one
You can search for an accountant or financial adviser in message boards and forums, or by joining expat groups in your area on social media. You can also look at our provider listings to find the range of services available in your new city.
Financial advisers can offer their expertise across a range of platforms, including face-to-face, over the phone, or via Skype consultations.
Note: From 1 January 2020, the government revealed a public register of fraudulent tax consultants on the Dutch Tax and Customs Administration website. Tax consultants who deliberately submit a wrong or incomplete tax return can receive a financial penalty. By making the registration public, the government hopes to combat tax evasion and fraud. The data will remain online for 5 years.
- Doing business in the Netherlands: Government information for entrepreneurs.
- Dutch Tax and Customs Administration (Belastingdienst): The official website of the Dutch Tax and Customs Administration has an English version with important information about the Dutch tax system.
- Dutch Ministry of Foreign Affairs (BuZa): The official website of the Dutch Ministry of Foreign Affairs offers specific information for newcomers in the section ‘coming to the Netherlands’.
- Dutch Chambers of Commerce (KvK): Provides information on starting a business, legal forms, registration in the trade register, international trade, and so on.
- Dutch Immigration authorities: The IND (Immigratie- en Naturalisatiedienst) has the governmental task to carry out the immigration policy.
- Ministerie van Financiën: A brief outline of all taxes in the Netherlands, including the 30% ruling.