Freelance tax

As a freelancer, you are responsible for paying income tax and VAT yourself.

Freelancing and taxes

As a freelancer, like any other working Dutch citizen, you are obliged to pay taxes on your income. The difference between being self-employed and working as an employee is that as an entrepreneur, you are responsible for declaring and fulfilling your tax obligations yourself. In addition to income tax, you also pay turnover tax (VAT). You do your income tax return annually and your VAT return quarterly. Both are reported via the website of the Tax Authorities.

What tax matters do you face as a freelancer?

In essence, as a freelancer, you deal with 2 tax matters: income tax return and turnover tax. Within these returns, you can use various deductible items. If you have purchased business products or services, you may deduct the VAT you have paid on them from the VAT you have to remit. In addition to business assets, you can also deduct travel expenses, office expenses, insurance, outsourced work, and housing costs from your annual profit. This reduces the amount you pay tax on. Furthermore, there are schemes through which the Tax Authorities provide entrepreneurs with fiscal benefits. Think of: Starter's Deduction, Small Business Scheme, Self-Employed Deduction, and Investment Allowance. We help you step by step to check what you are entitled to, calculate how much you will have left at the end, and reserve money for income tax and VAT.

Entrepreneur or not?

Having your own business and Chamber of Commerce (KvK) number does not automatically make you an entrepreneur for the Tax Authorities. They distinguish 3 types of income sources: salary from an employment relationship, profit from a business, and income from other work.

You are only an entrepreneur for income tax if you meet the criteria below:
  • You make a profit as a self-employed person. If you have a small profit margin on an annual basis or consistently incur losses, then there is no business.
  • If others determine how you structure your business and how the work is carried out, then there is a lack of independence and you are not an entrepreneur for the Tax Authorities.
  • Having a financial buffer to start your business and keep it running for some time indicates that you have a business.
  • You must invest sufficient efficient hours in your business. If you spend a lot of time on an activity without it yielding returns, there is usually no business.
  • If you have multiple clients, you are less dependent on 1 or a few customers and your independence increases.
  • Do you promote your business to attract new clients?
  • Is there a chance that your clients will not pay? Are you dependent on the demand for and supply of your products and services? If you are exposed to entrepreneurial risk, you probably have a business.
  • Are you liable for the debts of your business? This indicates to the Tax Authorities that you are an entrepreneur.

What if you are not an entrepreneur but still earn money as a freelancer?

If you are an entrepreneur for the Tax Authorities, you file your income tax return as such: as an entrepreneur. If you are not, you file your tax return as a private individual. If you are registered as a freelancer with the Chamber of Commerce but occasionally perform freelance jobs alongside your job as an employee, you file your tax return as a private individual and declare your freelance income as 'income from other work'. You do not have to pay VAT on income from other work. This means that you do not pass this on to your clients either. You mention on your invoice the explanation: 'exempt from VAT'.

Deductible items

As a freelancer, you can use deductible items. You can deduct these from your annual profit, reducing the amount you pay tax on and thus the amount you ultimately have to pay. There are various deductible items such as Starter's Deduction, Self-Employed Deduction, and Investment Allowance.

Contribution to the Healthcare Insurance Act

The contribution to the Healthcare Insurance Act is an additional contribution you pay, in addition to your premium to the health insurance company, for your health insurance. It is an income-dependent contribution that you pay to the Tax Authorities. This means: the higher your income, the higher the contribution. The percentages for the income-dependent contribution to the Healthcare Insurance Act (Zvw) may change each year. From 2024, the percentages of the Zvw are as follows:
  • Employer's contribution to the Healthcare Insurance Act: 6.57% (was 6.68% in 2023)
  • Contribution to the Healthcare Insurance Act that your employer or benefit agency withholds from your salary or benefit: 5.32% (was 5.43% in 2023)
  • Contribution to the Healthcare Insurance Act that you pay with a Healthcare Insurance Act assessment: 5.32% (was 5.43% in 2023)
  • The maximum contribution income in 2024 is €71,628 (was €66,956 in 2023).

The Small Business Scheme (KOR)

For freelancers who already partially work for themselves but still have a small source of income, there is the Small Business Scheme (KOR). Entrepreneurs who generate less than €20,000 in turnover per year are exempt from tax under this scheme. This means you don't have to file VAT returns and don't have to pass this on to your invoices. Instead, you mention: 'Exempt from VAT'. A benefit that pays off in time but not always in costs. If you don't pay VAT, you also can't reclaim the VAT on business assets you purchase from the Tax Authorities. Calculate the financial outcomes of both scenarios before registering your business. Within the KOR, you register yourself for 3 years. This continues unless you exceed €20,000 in turnover within this period. Then the KOR stops automatically.