Starting a business in the Netherlands as a freelancer
Do you have more questions regarding starting a business in the Netherlands?
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MFFA Belastingadvies | Tax Advice
Starting a business in the Netherlands as a freelancer
Starting a business in the Netherlands as a freelancer because you have a great idea? We can certainly recommend this. However, please be aware there are many formalities to be arranged when you start as a freelancer a business in the Netherlands. One of the reasons of starting a business in the Netherlands is because of its international outlook.
Before you start doing business in the Netherlands it is important to take into account several things such as “Where to register the company, what kind of legal form will I use, what kind of taxes will I be confronted ?” In this guideline many questions and formalities will be explained for self-employed entrepreneurs / freelancers.
We note that the tax/legal situation for a self-employed entrepreneur/freelancers planning to start a Dutch business is quite complicated. It is recommended to seek out professional tax / legal advice before starting your own business in the Netherlands.
Starting a business in the Netherlands – First Steps
Before you start your own business in the Netherlands as a self-employed / freelancer, you need to check whether you a need a Dutch residence permit (MVV) or work permit (TWV). This can be checked at the Dutch immigration service IND. where you have to comply with certain IND formalities.
If you have the nationality from an EU-member state you are free to move within the European Union for the purpose of self-employment and no registration is obliged at the IND. However, if you are from a non-EU country you need to apply for a residence permit at the Dutch immigration service. Whether a permit is granted depends on some economic criteria such as: being qualified to run a business (diploma, license), there is business plan, based on this business plan the company add something to the Dutch economy. Please note that the application will we reviewed very carefully.
Once this is completed you need to register yourself at the local municipality and arrange for yourself a personal number called ‘Burgerservicenummer’ (BSN).
Legal forms for starting a business in the Netherlands
If you pass for all the IND-requirements, you have to decide what type of legal form you would like to set-up and what kind of business structure you would like to operate under. There are two possibilities namely, non-limited liability and limited liability.
- Non-limited liability company:
- Eenmanszaak (Sole proprietorship)
- Commanditaire vennootschap (Limited partnership)
- Vennootschap onder firma – VOF (General partnership)
- Limited liability company:
- B.V. (private limited liability company)
- N.V. (public limited liability company)
- Cooperatie (Cooperative)
- Stichting/Vereniging (foundation)
Setting up a non-limited liability company is easier and cheaper (such as maintenance). However, you and your family its personal assets will be on the line if you go bankrupt or if you are sued. You don’t have this is with a limited liability company.
The most common used entities are the ‘eenmanszaak’ and the ‘B.V.’. These days many people work as a self-employed / freelancer in their field, These people are also called ‘ZZP’ers’ (‘zelfstandige zonder personeel’ or self-employed without staff). Most of the times they use an ‘eenmanszaak’.
Existing foreign companies in the Netherlands
Registration Dutch chamber of commerce / Dutch tax authorities
If you have decided what kind of business you would like to start, it must be registered at the Dutch chamber of commerce Registration can anywhere from one week before you start your business.
Limited liability companies (B.V. N.V.) are more complex to start then non-limited liability companies (eenmanszaak, VOF), since you form a corporation together with a Dutch notary. In that case, you should consult a Dutch tax expert if you would to set up a limited business.
After the registration of a business the Dutch tax authorities (Belastingdienst) are automatically informed by the Dutch chamber of commerce. They will issue then for example a VAT-number what can be used for tax deductions which may apply to your company.
Income tax and the regulations in the Netherlands
Non-limited liability company
If you have a non-limited liability company as a self-employed entrepreneur/freelancer then you have to declare your income as ‘business profits’. In that case you can also apply for certain entrepreneur facilities such as, investment allowance, tax-deferred retirement reserve and entrepreneur allowance (tax credits). Some entrepreneurs allowance are:
- Self-employed persons allowance (zelfstandigenaftrek)
- Starter allowance (startersaftrek)
- R&D allowance (S&O aftrek)
- Co-working partner relief (meewerkaftrek)
In order to fulfil the above mentioned allowances, you have to meet the ‘hour criterion’. This means you have to be active for at least 1.225 hours a year. This includes direct working hours but also hours spent on travelling, market research and administration. In your first year it is smart to keep an administration of your hours spent. For example, you must work in your company 50 weeks of 24,5 hours a week. For certain cases they make an exemption, such as pregnancy.
Limited liability company
If you have a limited liability company as a self-employed entrepreneur/freelancer such as a Dutch B.V., you are an employee of your own company. The B.V. has to pay corporate- dividend tax and the B.V. has to pay wage tax to the Dutch tax authorities for you as an employee. The entrepreneur allowance described above, cannot be applied by limited liability company.
For both (non-limited and limited companies), expenses can be claimed as business expenses. For example costs like: travel, marketing, communication, legal, accountancy, equipment, services from a third party can be deducted as business expenses.
Dinner, gifts and study trips / conference attendance costs are not fully deductible but partially. Not deductible are clothes, fines, personal devices, personal computers, general literature.
If you need a car for your business, then you have two options. Use your own private car for the business or put a car on the balance of the company. With the first option (using the private car), you can claim the business kilometer against € 0,19 per kilometer. The last option (on the balance) it is possible to deduct all the expenses (fuel, insurance, taxes). However, at the end of the year you must add the car to your personal income because of the personal use. As a result, you will have higher income. Which described option is the best, must be calculated and depends on the personal situation.
Based on the administration the income/corporate tax return must be filed. This must be done before April 1 of every year. As an entrepreneur you will receive an invitation from the Dutch tax authorities. Most tax advice companies have an extension arrangement with the Dutch tax authorities. In that case the tax return can be filed one year later. Be aware that if you file the tax return too late penalties will be issued.
30% ruling and start your own business in the Netherlands
Non-limited liability company
Many expats have the 30% ruling obtained when they were working for an employer, but what many expats do not know is that they can have the 30% ruling if they have their own Dutch BV or company. For example, a dentist or a doctor who are now working for an employer can have their own BV together with the 30% ruling. It does not matter if the company is foreign or is a Dutch B.V. Important is that the company is a legal entity paying taxes in the Netherlands.
Please be aware of the following requirements, if you would like to implement the 30% ruling for your own BV, as an self-employed entrepreneur/freelancer:
- During your current employment the 30% ruling has already been granted in the Netherlands;
- Within 3 month after ending your current employment you have to sign a contract with your own BV;
- A Dutch BV must be set up before signing the contract.
- The Dutch BV pays a taxable income of at least € 35,770 (excluded the 30% ruling), Included the 30% ruling this a gross income of € 51,100;
- A new request of the 30% ruling must be filed at the Dutch tax authorities;
- We recommend to obtain a special form issued by the Dutch tax authorities called “VAR” (“verklaring arbeidsrelatie”) annually, see below.
Hidden employment – Fictive employment
Self-employed entrepreneurs / freelancers must pay extra attention that they are not considered by the Dutch tax authorities, as a paid employee of their client at the end of the year. If this happens, you are not an independed entrepreneur anymore. Also, your client will be confronted with extra premiums, payroll tax and fees. You can ask yourself the following questions:
- Is there any authority between you and the client (is the work done in the office of the client, what kind of email address do you use?)
- Does the client give instructions to you?
- How many client do you have, only one big client or more?
Value added tax (VAT) in the Netherlands
In the Netherlands and Europe it is compulsory for a business to charge VAT (in Dutch: BTW) to its clients on the invoice. The VAT an entrepreneur is charging a client can be offset against the VAT a supplier is charging him. At the end, the rest is paid to the Dutch tax authorities. You cannot reclaim any VAT, if you do not charge VAT on your invoices (basic rule).
When the Dutch tax authorities issue the tax forms to you, you always receive a VAT number (unless you are VAT exempted such as medical, journalist, authors). Most of the time entrepreneurs must file the VAT tax return on quarterly basis. However, in case of high turnover it can be changed to monthly. On the other hand if the turnover is very low, on request the VAT tax return can be changed to annually.
The first VAT-return must always be filed on paper. You can only reclaim paid VAT on goods or services which have been charged to you when it will be used for your activities as an entrepreneur. After the first VAT return, the Dutch tax authorities will send automatically a VAT-assessment with the amount which has been declared by you. Make sure the VAT-returns are filed on time. Otherwise, penalties will be issued. Also, when you have to pay VAT, pay it on time. The Dutch tax authorities will issue penalties very quick.
The VAT rate in the Netherlands is at the moment 21% (standard rate) or a reduced rate of 6% and 0% (for supply in the EU intra-Community supplies and export). For e-commerce special rules apply.
If you invoice clients, certain invoice requirements must be met. The invoice must contain the date of issue, invoice number, full name and address of you and the client, description of the provided goods/service, VAT rate, the amount, chamber of commerce number. In EU situations the EU-VAT number of you and the client abroad must be stated on it.
Kleine ondernemersregeling (VAT) – starting a business in the Netherlands
In order to apply for this special tax facility, you need to file a request to the Dutch tax authorities.
More information about starting a business in the Netherlands as a freelancer?
If you have more questions regarding starting a business in the Netherlands? Or want us to take care of all the paperwork?, please do not hesitate to contact us via our contact form. You can also call us from within The Netherlands at (0)85 0030140 or call us from abroad at +31 (0)20 2615615.