Working in the Netherlands as a Self-Employed Person

Guide to contracting in the Netherlands

A foreign company which wants to open a subsidairy company in the Netherlands can do this. The best solution would be to set up a limited company to make sure all liability is secured in the Dutch branch. If the foreign company is based in the EU then this company can also be used to do business in the Netherlands but then the whole company will be liabiliy for any problems in the Netherlands and it will be a question whether every client wants to deal with a company which doesn't have a Dutch legal form.

There are several different types of business, for example:

• One man business/one woman business (soletrader) or freelancer
• Partnership under common firm (VOF)
• Partnership
• Private limited liability company (BV)
• Foundation
• Association

Look here for more information about the legal forms.

• What are you marketing and why?
• To whom?
• What is your plan of attack?
• What will it cost?
• What results will it have to deliver?

The need for a business plan depends on the size of your company and the need for external finance. There is no obligation to make a businessplan but if you need money or have to convince other businesses about the strength of your business a businessplan will help.

Download here a template for a businessplan

You have to register your business in the trade register of the Chamber of Commerce. You will be asked for information on the legal form and the trading name of your company. Entries in the trade register are open to review by the public, meaning that both individuals and businesses can request information from the trade register.

Is your diploma from a country other than the Netherlands?

If you come from any of the countries listed below, you will need to obtain an apostil stamp. If you come from any other country, you will have to have your diploma legalized.

Apostil stamp:

If you are certain that you are ready for business, you should request the "Opgaaf gegevens startende ondernemers" form (Statement of information by a new business) from the Starters' Desk of the tax authorities. The tax authorities have a starters desk at the Chamber of Commerce so you can arrange both registrations at the same time. The tax authorities will make a provisional assessment of your business and decides which taxes you have to pay and will provide you with the necessary registration numbers (for example a VAT number).

What kinds of taxes do you have to deal with?

Businesses may have to deal with four kinds of taxes:

1. Value added tax (VAT): It is almost always compulsory for businesses to charge clients VAT (BTW).

2. Income tax: If the Inland Revenue considers you as an entrepreneur, you can benefit from a number of tax allowances. You will then pay less income tax. If you are a director/shareholder or normal employee of a limited company then you must be on a payroll.

3. Wages and salaries tax: If you employ staff, you will be liable to pay wage tax. A payroll administration must be set up.

4. Corporation tax: If you have a private company with limited liability, you will be liable to pay corporation tax.

Value added tax

Businesses are nearly always liable to charge value added tax to their clients. The rate is 6% or 19% depending on the type of product or service. The VAT which you receive from your client must be paid to the tax office. The VAT which you have paid out yourself to your suppliers can be offset against this. Value added tax is paid either monthly, quarterly or annually depending on the type of business you have and the level of turnover.

Be sure to keep all invoices you receive(d) and paid. You can still claim back all the VAT on invoices you paid in the recent past for your new business in your first VAT return. That's why it can be advantageous to contact the tax office as soon as possible.

For businesses which have very little VAT to pay, the "Kleine ondernemersregeling" (Small business allowance) applies: you will then pay less VAT, or none at all. This ruling is only applicable to a company which falls under the income tax. A limited company can't use this ruling based on this.

Here you will find more information about VAT

Income tax

Entrepreneurs who pay turnover tax are not always liable to pay income tax. When deciding if an entrepreneur has to pay income tax, the tax office will look at the following:
· the extent of the work performed;
· the level of turnover and profit;
· the time spent in the business;
· the presentation to the market;
· the number of clients (a minimum of three clients is often required);
· the presence of debtors' risk.

To be sure you can request the tax office to let you know whether you will be treated as an entrepreneur or not. This is done with a VAR declaration.

If the entrepreneur is liable to pay income tax, he can take advantage of a number of tax allowances. If you are an employer, you have to make wage deductions and pay these to the tax office. Declaration and payment is usually done on a quarterly basis.

Also look here for information for freelancers

Corporation tax

If you have chosen a private limited company (BV) as the legal form for your business, you will have to pay corporation tax and dividend tax.

The choice of business space

You should ask yourself the following questions when looking for business space:

• Will I be starting up in my own home?
  If you are going to work from home, you should consider the zoning plan: Most homes are within 'residential zones'. These are set out in the zoning plan which prohibits the establishment of a business in such a zone. Nevertheless, a home business may sometimes be permitted. For example:
  • if the business is purely office-based
  • if no clients visit the house
  • if the business can cause no disturbance
  • if it is only a small part of the house will be used for business activities.
• Will I buy existing premises or have new premises built?
• Will I rent business premises? What obligations does rental involve?
• Which location is most suitable for my business?
• Which locations are available? What are their advantages and disadvantages? For an overview of available business and office space, please contact the Chamber of Commerce in your region.
• What costs are involved?

Anyone doing business in the Netherlands takes risks. To some extent, you can insure against these risks. Think about which risks you wish to run and which insurances you wish to take out. In the case of small risks it may be more cost-efficient to put some money aside than take out an expensive insurance policy.

As an entrepreneur you will be dealing with two kinds of insurance:

1. Personal insurance (such as health insurance and household contents insurance)
2. Business insurance (such as insurance of inventory and stock).

To make some money it's important that you send invoices for the work you did. This must be done before the 15th of the month after the service has been provided by you. An invoice must meet certain requirements to be accepted by the taxoffice. VAT is only deductible if it is mentioned on an invoice which is made according to the rules. So this is important for you and your client.

EU regulations concerning invoices