Working on your own account in the Netherlands offers many potential advantages, such as the chance for higher wages and a presence in a less competitive market than Poland. However, there are some formalities involved, the knowledge of which will make the process of becoming self-employed much easier – especially if you are considering moving your business from Poland. In this guide, you will learn about some of the less obvious law issues that will make the process of becoming self-employed in the Netherlands easier and deciding whether this is a career path that is right for you.
How do I settle my accounts with the Dutch tax authorities as a self-employed person in the Netherlands?
One of the most important aspects of self-employment in the Netherlands is accounting to the Dutch tax authority (Belastingdienst). Self-employed persons have to submit tax returns every three months (VAT) and every year (income tax).
VAT in the Netherlands is 21% for most goods and services, 9% for certain foodstuffs, pharmaceuticals and cultural services and 0% for exports and international services. If you provide services to a Polish company, you need to check whether you are covered by the reverse charge principle, which means that it is the recipient of the service who has to charge and pay VAT in their country.
Income tax in the Netherlands is calculated on the basis of a self-employed person’s net income, after deducting business expenses and any tax reliefs. It is higher than in Poland – 36.93% for income up to €73071 per year and 49.50% for income above this amount.
Costs that can be deducted from income are, for example, the purchase of equipment or developing your own qualifications through training and courses – in other words, anything that is directly related to running and developing your own business.
A self-employed person in the Netherlands is required to issue invoices for his or her services or goods, including the tax identification number (BTW-nummer), the date, the gross and net amount as well as the VAT rate.
Accounting for VAT in the Netherlands can be complicated, so consider using the support of an accountant or tax advisor in the process of setting up your business and accounting for it. You can also get help from the Dutch tax authorities and organisations that support the self-employed in the Netherlands:
– ZZP Nederland – an organisation representing the interests of more than 50,000 self-employed people in the Netherlands. It offers legal advice, insurance, training and networking support to its members.
– FNV Zelfstandigen – a trade union for the self-employed from various industries. It helps to negotiate working conditions and contracts, provides legal assistance and tax advice and organises meetings and seminars for the self-employed.
– PZO – a platform for the self-employed in the service sector. It is dedicated to lobbying for better working and development conditions for the self-employed and offers them information, training and networking opportunities.
Self-employment in the Netherlands – what tax benefits are you entitled to?
Dutch law provides for a number of tax credits and deduction possibilities, depending on a number of individual factors.
For more information, see the Dutch government’s official website on self-employed professionals – Subsidies and tax schemes for self-employed professionals | Business.gov.nl.
However, even with an official government source, finding your way through the maze of tax information can be difficult for a beginning entrepreneur. That is why it is also worth considering the services of a legal advisor or accountant – the consultation will be chargeable, but there is a high chance that it will save you much more than the cost of seeking professional advice and a specialist opinion.
Moving your own company to the Netherlands – is it possible?
Moving a company to the Netherlands can be a beneficial solution for entrepreneurs who want to expand their business in the EU market. Unfortunately, there is no single rule for this and it usually simply requires closing down the business in one country and then registering it in the other – the Netherlands. You can find out what conditions you need to meet to register your business in the Netherlands in our previous article.
When closing a business in your home country and opening one in the Netherlands, it is crucial to meet the legal obligations involved – you must change your tax residence to the Netherlands, which means that from now on you will be subject to Dutch tax legislation and pay your taxes there.
In addition, if the transfer of the company results in an exit from the domestic tax system without the sale of the company’s assets, so-called exit tax on unrealized profits may be charged. Exit tax is income tax on the difference between the market value and the book value of the company’s assets as at the date of the transfer of the registered office.
Apparent self-employment is a situation in which a freelancer in the Netherlands is in fact dependent on one or more principals and does not have full freedom to carry out his or her work – meaning that the formal legal conditions for being self-employed are not met.
This entails a range of negative consequences, such as no social security, no sickness insurance and a lower pension. It also exposes you to tax or administrative sanctions. To avoid apparent self-employment, you need to make sure that you meet the statutory criteria for genuine self-employment – we described these in a previous article.
Self-employment in the Netherlands – what next?
This and the previous article give you key information on the laws and regulations related to self-employment in the Netherlands. In the next article, we will give you some useful tips on how to look for clients and build an expert image, and thus increase your earnings!