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Taxes and administration

What taxes do I have to pay for an incorporated business structure?

What taxes do I have to pay under an unincorporated business structure?

 As a  self-employed entrepreneur you are responsible for your tax affairs. It is important to know all about the taxes that have to be paid and deductions and exemptions that may apply.

You should set up your business accounts on time. Business owners in the Netherlands have an obligation to keep business records for up to seven years. They include records of invoices, invoices to pay, expenses connected with business activities, income and private use of goods and services. It is important to note that you are not required to hire an accountant. However it may be wise to do so as the Dutch the tax system and regulations are complex.

The legal forms that falls under this business structure are Eenmanszaak, General partnership (VOF), Limited partnership (CV) and Professional partnership (Maatschap). These are the taxes that will need to be paid every year:

  • VAT – Value-added tax or sales tax (BTW)
  • Income tax (Inkomstenbelasting)
  • Payroll tax (Loonheffing)

 VAT

It is compulsory for businesses to charge VAT (BTW) when invoicing their clients. There are exceptions. If you teach educational courses or provide educational training, you may be VAT-exempted for these activities. Services rendered by journalists, composers and authors are also VAT-exempt, just like medical services and products.

If the  “Small-sized entrepreneurs regulation”  (Kleine ondernemersregeling) applies in your situation, you will pay less VAT or no VAT at all.

For better understanding see:

www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/business/vat/

 Income tax

The profit made in unincorporated business structures is taxed as income tax.  Each partner of a partnership will pay her/his own income tax on his/her profit share.

Entrepreneurs, recognised as such by the Tax Authority, are entitled to special tax allowances and will then pay less income tax, some of which are:

  • Entrepreneurs allowance (zelfstandigenaftrek)
  • Starters allowance (startersaftrek)
  • Small-scale investment allowance (kleinschaligheidsinvesteringsaftrek)
  • Tax-deferred retirement allowance (oudedagsreserve)

The criteria and standards to be met are explained at (in Dutch only):

www.belastingdienst.nl/wps/wcm/connect/nl/startende-ondernemer/startendeondernemer?ns_campaign=zzpstarters2017&ns_mchannel=&ns_source=google_adwords&ns_linkname=aftrekposten

Payroll tax

If you employ staff, as the employer, you will have to deduct payroll tax at the source and pay to the Tax Administration. The payroll taxes are composed of the: wage tax, national insurance contributions, employed persons’ insurance scheme contribution and income-dependent Care Insurance Act contribution.

For more details about taxes see:

https://business.gov.nl/regulation/payroll-tax/