Freelancing in the Netherlands? First get your tax sorted!

Setting up your own business or going it alone as a freelancer takes a lot of time and energy, and it is easy to forget some of the things you need to do. For example, if you are considering becoming a ZZP’er, how can you make sure you keep on the right side of the taxman?

Dealing with BTW

One of the first bits of paperwork you will be confronted with if you go into business in the Netherlands is dealing with BTW — omzetbelasting, or value added tax. “What people often forget is that they do have to submit their VAT return every three months even if they have only just started in business,” says Andra Radu, from Taxmo, an online bookkeeping and tax platform for freelancers, which largely focuses on helping internationals.

“Your first VAT deadline can arrive sooner than you expect. Starting a business doesn’t necessarily mean you have three months before you need to think about VAT. Depending on when you register, the VAT quarter may already be underway. And even if you haven’t made much money yet, you may still have a return to submit.”

Using a smart bookkeeping software, like that developed by Taxmo, means you can produce and send your invoices, keep a record of suppliers and upload the invoices they have sent you, calculate your personal expenses, and deal with your VAT and your income tax on one all-encompassing platform. You don’t even have to fill in the tax office’s own forms because Taxmo does it for you.

Understanding tax terminology

For many internationals, the difficult part isn’t running the business itself, it’s understanding the language and administration around it. You must file a VAT return if you are registered as an entrepreneur with the tax office (and have been assigned a VAT number starting with NL), if you are a ZZP’er — or freelancer — or if you are running a VOF, BV, or eenmanszaak (partnership, limited company, or sole proprietorship).

The jargon can seem incomprehensible and Dutch tax terms, unfamiliar deadlines and different rules for different types of clients can make a relatively simple freelance business feel much more complicated than it actually is.

Tax rules for freelancers

One rule freelancers may not be aware of, for example, is the KOR — yes, more jargon — the small business ruling, which, simply put, means that if you book annual turnover of less than €20,000 a year, you may be able to avoid dealing with VAT altogether.

Qualifying for the KOR doesn’t automatically mean it’s the best choice for your business. If you have significant business expenses, being unable to reclaim VAT on them can make a difference. It’s also worth thinking about how quickly you expect your business to grow rather than looking only at your turnover today.

“Business expenses are another area where new freelancers can easily get confused,” says Andra. “Keeping track of invoices, receipts and expenses from the beginning makes life much easier when it’s time to file, particularly when you’re still learning which costs actually count.”

Cross-border VAT

As an international freelancer, you may well have clients in other countries, and that’s something you’ll need to sort out too when keeping on top of your taxes. “This is particularly relevant for internationals, who often continue working with clients outside the Netherlands after setting up here,” Andra points out.

“You might have a Dutch client, an EU client and a US or UK client in your first few months of freelancing. How you handle VAT can depend on where the client is based, whether they’re a business or consumer and what you’re selling, so it isn’t always as simple as adding 21% to an invoice.”

File your tax returns yourself

Of course, smart software cannot solve all problems. There will always be situations where professional advice is useful, particularly as a business becomes more complex. But freelancers with relatively straightforward businesses don’t necessarily need to outsource every VAT return or routine piece of administration.

“Becoming a ZZP’er does not mean you need to understand every part of the Dutch tax system yourself or hire an expensive accountant for every filing,” says Andra. “Our platform has been designed specifically for the Dutch situation, to make sure you can do as much as you can yourself. We are all Dutch taxpayers even if we don’t speak the local language, or at any rate not much. Paying tax is not something you can avoid, but you can make it as easy as possible.”

Find out here how Taxmo helps freelancers handle bookkeeping, VAT and income tax in the Netherlands, without having to become Dutch tax experts themselves.