It is therefore essential that you are prepared to run your freelance business in a responsible manner. Finding a good tax advisor to maintain your administration is one of the best ways to do this. For help with tax and administration, check out our listing of expat-friendly tax advisors and accountants.
Dutch taxes and BTW for freelancers
While registering with the KvK, you should also ask to be registered with the Belastingdienst (Dutch tax office), which will issue you with a BTW nummer (VAT number).
The Dutch tax office collects tax on all products and services sold in the Netherlands. They do this by requiring all businesses to add BTW tax (usually 21 percent) to their sales. The tax office then collects this tax four times a year via the VAT declaration (BTW aangifte). If you have a freelance business then you will also be collecting for the tax office. You can find out more about this on our corporate tax page.
Freelancing and your income tax return
On top of paying VAT, as a one-person business you are also required to pay income taxes in the Netherlands. You do this by filling out a tax return each year. Doing your annual income tax return is slightly more complicated when you are a freelancer compared to an employee, because you will have to calculate your tax independently. That is why having a good accountant is essential.
Tax breaks for new businesses
On the positive side, there are several tax breaks, collectively known as the ondernemersaftrek (entrepreneurs’ deduction), that are available for new businesses in their first few years.
Business-related deductions
As a self-employed person, you can also deduct work-related costs from your annual income. This includes materials and equipment, travel, services related to your business, the cost of leasing a workspace, part of your rent if you work from home.
Freelance administration
As a freelancer, you will be required to maintain your business administration. This is not just invoices and bills but also a record of hours worked. Keeping track of your hours is important because it can make you eligible for some of the tax breaks. For example, to be eligible for the zelfstandigenaftrek (private business ownership allowance), freelancers must work a minimum of 1.225 hours per year in their new business.
Define your relationship with clients
The issue of labour relationships has relatively recently undergone legislative changes. Labour relationships are important because the Dutch tax office uses them to determine if a freelancer is independent or not. If a freelancer is found to be too dependent on one client, the Dutch tax office may determine that they should be in paid employment.
The Dutch tax office needs to know the nature of the working relationship to help determine who, out of the client and the freelancer, is financially responsible for the freelancer’s social security premiums such as unemployment benefits or pension contributions.
Old system: VAR (Verklaring Arbeidsrelatie)
Previously, freelancers had to apply for a labour relationship declaration from the tax office. The tax office would then assign them one of four types of VAR:
- VAR-loon (Verklaring arbeidsrelatie-loon uit dienstbetrekking)
- VAR-row (Verklaring arbeidsrelatie-resultaat uit overige werkzaamheden)
- VAR-wuo (Verklaring arbeidsrelatie-winst uit onderneming)
- VAR-dga (Verklaring arbeidsrelatie-inkomsten uit werkzaamheden voor rekening en risico van de vennootschap)
This system was found to have several drawbacks as companies used it to avoid paying social security premiums for freelancers who were effectively employees. ZZP'ers often did not agree with the declaration they received, as it affected their employability, and some arrangements only protected the client, not the contractor.
As of May 1, 2016, it is no longer possible to request a VAR.
New system: DBA model contracts
On May 1, 2016, the Dutch VAR system was replaced by a new system of model contracts (modelovereenkomsten). Under the new deregulatory law known as DBA (Deregulering Beoordeling Arbeidsrelaties), freelancers and their clients are expected to discuss and sign a contract that defines their working relationship.
The Dutch tax office website provides template contracts for general and individual work agreements, as well as per sector and profession. The contracts can be found (in Dutch) on this Belastingdienst search page. In order to find the template contracts, you need to fill in the following:
- Doelgroep: Ondernemer
- Onderwerp: Modelovereenkomsten
- Belastingjaar: Jaaronafhankelijk
Each contract template has a clear explanation for which professions and situations it should be used. These contracts are free for use by both client and freelancer and can be customised in certain areas.
The basic purpose of this new arrangement remains the same as the VAR. By agreeing on a model contract, client and contractor clarify who is responsible for paying the freelancer's social security premiums, if applicable.
Transitional period
From May 1, 2016, the Dutch government instituted a transitional period of one year. During this phase, freelancers and clients have the time and flexibility to adjust their agreements and no action will be taken by the government (with the exception of extreme cases of fraud). Starting on May 1, 2017, the Dutch tax office will monitor the contracts.
Changing from VAR to model contracts
If you have a VAR from 2014 or 2015 and you will continue to do the same work for the same clients under the same conditions, you can continue to use that in 2016. If you currently don’t have a VAR you can instead use a new model contract.
Create your own model contract
It’s possible to write up your own model contract as well. Prior to entering into a contract with a freelancer or ZZP'er, a company will be able to send the new model contract to the Belastingdienst for approval.
A client and contractor are not required to submit their model contact to the Dutch tax office, however. The advantage of using one of the official contracts or getting one approved is that it guarantees that the client will not be held responsible for payroll taxes and contributions.
Insurance and pensions for ZZP'ers
As a freelancer, it is advisable to take out business insurance to protect yourself against risks you are not exposed to as an employee, such as sickness or injury, damage to your business, or mistakes that cause damage to others.