Home Working in the Netherlands Self-Employment Managing your finances as a freelancer in the Netherlands
Last update on June 09, 2021
Written by Gary Buswell

Find out about managing your finances as a freelancer in the Netherlands with this guide that includes accounting, tax planning, and more.

The Netherlands has the fifth-highest rate of freelancers and self-employed workers in the European Union, with 16.7% of the population working for themselves. But although self-employment is popular, many run into difficulties when it comes to dealing with their finances. HBK Tax Advisors, Accountants, Tax Consultants specializes in expat financial planning, offer a few essential tips on managing your finances as a freelancer in the Netherlands.

HBK Tax Advisors, Accountants, Tax Consultants

At HBK, a dedicated team of six consultants serve their clients with great enthusiasm and a personal approach. The team can apply their particular expertise to provide affordable, practical and tax-efficient support to expats in various fields.

Starting off on the right foot

Good financial planning is crucial to any business or entrepreneurial operation, no matter who or where you are. You can have the greatest product or skill in the world, but mismanage your money and it’s likely you won’t last long. Unlike regular employment, self-employment doesn’t involve a steady wage landing in your account every month, so you need to be organized to keep things ticking over. Recent studies have found that running out of cash is the second most common cause of new business failing (after a lack of market for the product or service).

Freelancer looking at his devices
Managing your finances as a freelancer in the Netherlands doesn’t need to be difficult.

Coming up with a sound financial management plan before you start your business in the Netherlands could be the difference between boom and bust. “One of the best things you can do right at the start is talk to an advisor and make a plan,” says Simone van der Hoeven of HBK. “Getting sound expert business advice on issues such as budgeting and taxation will help prepare you for what lies ahead. This is especially important for expats who might not be familiar with local tax regulations.”

Keeping accounts as a freelancer in the Netherlands

The first thing to bear in mind is separating your personal and business funds. “Although not a legal requirement, it’s strongly advisable for freelancers to have separate business and personal bank accounts. They will keep better track of finances this way,” says Saskia Hemmes-van der Kruk of HBK. “Some freelancers might also want to think about an additional savings account, or an account to manage tax payments. In any case, two accounts should be the minimum.”

Separating your personal and business finances makes it much easier to track your income and expenses, plan your budget, and ensure that you have a healthy cash flow. It also helps you to keep good records which is important when it comes to sorting out your income and business expenses for your Dutch tax return.

“The most common mistakes when managing your finances as a freelancer in the Netherlands are spending all of their money without budgeting for taxes, and mixing up their private and business expenses” says Simone.

You can open up a Dutch business account with the same bank that you use personally, or you can choose to set up an account with a different bank. Dutch banks that offer expat-friendly accounts for freelancers include:

Tax planning for Dutch freelancers

Know which taxes you need to budget for

If you’re self-employed, you won’t have the benefit of an employer sorting out your taxes for you; you’ll need to do it all yourself. This causes headaches for many freelancers. “There is a lot of confusion among freelancers about the deductibility of business expenses and BTW obligations. This is where it can pay to invest time in talking to an advisor,” says Simone.

A meeting at a coworking space

Dutch taxes that freelancers need to be aware of, and budget for, are:

  • Income tax: payable on business profits, freelancing income, or salary from contract agreements. This needs to be paid annually at a rate of between 36.65% and 51.75%, depending on income.
  • BTW (the Dutch equivalent of value-added tax): this is payable on turnover at a rate of either 9% or 21%. There are exemptions, however, for certain products and services, some international businesses, and some small-sized entrepreneurs. Freelancers file BTW returns quarterly. BTW-registered businesses and freelancers can charge BTW on their products and services, but this needs to be clearly recorded on invoices.

BTW filing and recording procedures can seem complicated for new freelancers. It is a good idea to speak to a qualified tax expert to find out whether you qualify for exemption, how much you need to pay, and how to deal with BTW administration.

Be aware of credits, exemptions, and deductions

There are a number of credits and allowances in the Dutch tax system that freelancers can use to offset against their tax bill, such as the investment allowance. Freelancers that worked more than 1,225 hours in the calendar year are eligible for additional tax credits, such as the entrepreneurs allowance. The 1,225 hours can include any business time spent traveling, marketing, studying, or doing administration.

It’s also important to accurately record all business expenses that you will need to deduct from your business income to calculate business profits. This will help you calculate what income tax needs to be paid in the Netherlands. Expense deduction categories freelancers should include for tax purposes are:

  • Purchasing costs/outsourced work
  • Depreciation
  • Expenses on cars and transportation
  • Maintenance for machinery
  • Accommodation expenses
  • Sales and marketing
  • Administration costs
  • Financial income and expenses

Expat freelancers starting a business can qualify for a tax exemption on 30% of their earnings for a five-year period. The 30% ruling is an allowance for working and living costs for workers hired from abroad, but it can be paid to self-employed professionals if they structure their business as a limited company (BV).

As Saskia explains: “if you set up a BV, register with the Dutch tax office for payroll tax, and go on the payroll as an employee of your own Dutch company, you’ll be eligible for the 30% rule if you meet the other conditions. However, there are other tax and administrative considerations, such as paying corporation tax as a BV. You should get advice before doing this.”

Social security for freelancers in the Netherlands

Social security in the Netherlands is divided into two parts:

  • National insurance (volksverzekeringen in Dutch), which covers pensions, child benefits, survivor benefits, and long-term care;
  • Employee insurance (werknemersverzekeringen in Dutch), which covers unemployment benefits, sick leave, and disability benefits.

Tax payments cover the costs of national insurance for freelancers and self-employed workers; employee insurance, however, is voluntary, as it is not applicable to neither ZZP-ers nor DGAs. Over two-thirds of freelancers don’t have insurance against unemployment, illness, or disability. This puts them at risk if there is a downturn in business or they can’t work due to illness or injury.

A freelancer works on his laptop at a Dutch train station

All self-employed workers in the Netherlands can take out voluntary insurance through the Dutch Employee Insurance Agency (UWV). For a monthly premium, they will receive benefits in the event of unemployment, sickness or long-term health issues. The amount you pay and will receive depends on your usual self-employed wage. You can use this online tool to calculate premiums.

Female freelancers who become pregnant can register for maternity benefit (ZEZ) through the UWV and receive the same level of benefits as salaried employees.

To register for voluntary insurance, you should have previously been employed and making social security payments in the Netherlands and you should register within 13 weeks of finishing making compulsory insurance payments. Other options for coverage against work-related risks are to take out private sickness or disability insurance or join a bread fund (broodfonds in Dutch). Small insurance cooperatives also exist, with about 20–50 self-employed members. These cooperatives provide financial support to members in the event of illness.

You can speak to a financial adviser or social security expert to discuss which Dutch social security solution is best-suited to managing your finances as a freelancer in the Netherlands.

How Dutch freelancers can save for retirement

All self-employed and freelance professionals in the Netherlands are entitled to the Dutch state pension (AOW) through national insurance payments. They can also supplement this through private pension arrangements or, if working in certain industries, paying into a voluntary pension fund for self-employed workers. It is also sometimes possible for self-employed workers to continue paying into the pension scheme of their previous Dutch employer. These contributions remain tax deductible for 10 years.

Freelancers can also budget for their retirement payments on their tax returns. “If you work more than 1,225 hours on an annual basis, you are allowed to include a fiscale oudedagsreserve (tax-deferred retirement reserve),” explains Simone. “This way, you can postpone taxation, which may also lead to taxation at a lower tax rate.”

Loans and mortgage options for freelancers in the Netherlands

Dutch lenders, much like those elsewhere, will take a good look at income and employment stability before granting a mortgage or a loan from a bank in the Netherlands. Freelancers need to provide a healthy set of accounts and income tax returns for the last three years. However, newer self-employed professionals are sometimes able to secure financial help from banks and mortgage brokers.

Getting a mortgage in the Netherlands when starting out as a freelancer might prove difficult but not impossible,” says Simone. “A financial advisor may help find a solution in good dialogue and cooperation with the bank.”

Regardless of how long you’ve been operating as a freelancer, any lender needs to be confident that finances are in order and up-to-date. This brings us back to the importance of good book-keeping and planning.

“A bank usually values good administration, good prospects, and a good relationship between client and bank,” says Simone.

Insurance for freelancers in the Netherlands

There are a number of insurance policies in the Netherlands that freelancers can take out, both personal and professional, so it’s important to work out which ones you’ll need and budget accordingly for them. Some insurances are compulsory, such as car insurance for drivers. Other insurances might make sense to mitigate risks while at work or at home.

Key business insurances in the Netherlands for freelancers include:

  • Business liability insurance: protects against damages to third parties while you are carrying out your work.
  • Professional liability insurance: protects against damages suffered by clients or customers as a result of your professional advice or information.
  • Health insurance: compulsory for all Dutch residents and will need to be purchased regardless of your employment situation. Expat friendly health insurance companies include Allianz and Cigna.
  • Disability insurance: it’s advisable to take this out through either the voluntary UWV scheme or a private insurer.

Useful resources for freelancers in the Netherlands

The idea of managing your finances as a freelancer in the Netherlands can appear daunting at first. Worry not, however; there is a wide array of resources available to get you started. Some government sources that could help include:

  • Business.gov.nl: support from the Dutch government for entrepreneurs and those starting a business in the Netherlands.
  • Kamer van Koophandel (the Chamber of Commerce for the Netherlands; KvK for short): information on various financial aspects of running your own business in the Netherlands.