VAT and income tax for self-employed professionals

Registration at the Netherlands Tax Administration

When you start your business, you must register with KVK and with the Netherlands Tax Administration (Belastingdienst). Most persons starting a business on their own as a self-employed professional start an eenmanszaak (sole proprietorship) or a bv (private limited company). Read more about choosing a legal business structure.

If you register as an eenmanszaak, KVK will take care of your registration with the Belastingdienst. If your legal structure is a bv, your notary will register you with KVK and the Tax Administration. The Belastingdienst will decide whether you are an entrepreneur. If you are, you must file tax returns for VAT (turnover tax) and income tax.

Entrepreneur for the purposes of turnover tax

VAT (value added tax) is a form of turnover tax. The Tax Administration almost always decides that freelancers/self-employed professionals are entrepreneurs for the purposes of turnover tax. This means that they must charge their clients VAT (btw). And that they must file a VAT return, and pay the received VAT to the Belastingdienst. You may deduce the VAT you have paid yourself to suppliers.

How much VAT do I charge or pay?

There are 3 VAT rates in the Netherlands:

• 0%
• 9%
• 21%

Read the article VAT rates and exemptions to find out which VAT rate applies to your situation.

Small Businesses Scheme KOR

If your turnover is less than €20,000 per year, you may apply for the small businesses tax scheme (kleineondernemersregeling, KOR). You then do not have to file VAT returns. There is a downside to this: you cannot reclaim VAT you have paid, to your suppliers for example.

No VAT

Some services (in journalism and education, for example) are exempt from VAT. That means they do not have to charge and pay VAT.

VAT identification and VAT number

When you register with the Tax Administration, you receive 1 or 2 VAT numbers.

Eenmanszaken (sole proprietors) have 2 VAT numbers:

1. a VAT identification number (btw-id). You use this for your contacts with clients (for example, on quotations and invoices);
2. a VAT tax number, for communications with the Tax Administration.

BVs have 1 VAT number for all their communications, with customers and the Tax Administration.

Entrepreneur for the purposes of income tax

The Belastingdienst will also decide whether you are an entrepreneur for the purposes of income tax. There are several criteria for this. If you do not fulfil these criteria and you are not employed by your customer, the Tax Administration regards your income as regular incidental earnings. In that case, you cannot claim certain tax deductions for entrepreneurs. But you may claim expenses related to your work.

If the Tax Administration decides you are an entrepreneur for income tax, you have to file an income tax return or a corporate income tax return.

Which income tax return do I have to file?

That depends on your legal structure:

• If you have an eenmanszaak (sole proprietorship), you file an income tax return.
• If you have a bv (private limited company), you file a corporate tax return.

Model agreement

The Tax Administration may check if your relationship with your client was really employment. This may be the case, even if you did not intend it. If the Belastingdienst decides you were in an employment relation, both you as a self-employed professional and your client may have to pay extra taxes. For example payroll taxes.

To avoid this, you and your client can decide to use a model agreement. This is proof that you have an independent business relationship. You do not have to do this, but it can be useful. The Tax Administration offers examples of model agreements on their website. These are only available in Dutch.

Tax facilities, subsidies and benefits

As a freelancer/self-employed professional based in the Netherlands, you can apply for a number of benefits and tax facilities and subsidies.