Income Tax Return (ZZP) in the Netherlands 2024: Guide to ZZP Taxes
According to recent figures published by the Employee Insurance Agency (UWV), almost 1.51 million people — or 20% of the Dutch labor force — decided to quit their jobs in 2022. Many of those opted for self-employment in the Netherlands, increasing the total number of self-employed workers by 14% in the past two years.
Whether you already find yourself among them or just contemplate the idea for now, you’re gonna have to know your way around income tax and how earning are taxed. It’s a bit tricky, naturally — but we’ll be happy to clear some of the nuances up in this article about taxes, as well as tax obligations.
What is Income Tax by the Dutch Law?
As a self-employed professional (zelfstandigen zonder personeel, or ZZP) in the Netherlands, you can set up a sole proprietorship (eenmanszaak) so that your business is not separated from your personal assets. That also means you’ll be expected to pay income tax (inkomstenbelasting) instead of corporate tax (vennootschapsbelasting) over your taxed earnings, aka your income minus deductible items and fiscal allowances (don’t worry, we’ll get to that).
Essentially, as a ZZP, all income derived from your business activities will be considered personal earnings and subject to being taxed under the individual income tax rules. Understanding how these Dutch rules apply and taxed can make a significant difference in your overall liability.
How to calculate income tax?
The amount of taxes you need to pay depends on several factors:
your income
your assets
deductible costs
outstanding debts in Netherlands
In 2023, those earning up to 73,071 euros a year will see their rate fall by 0,11% — to 36,93%, saving them up to 102 euros in tax this year. All earnings over that barrier will be taxed at a rate of 49,5%.
Now, to those deductions in the Netherlands: you can be eligible for entrepreneur or ZZP allowances if you meet the hours criterion (at least 1,225 working hours in most cases) and have not yet reached the state pension age at the start of the calendar year. In that case, you can deduct €5,030 from your earnings when you file the taxed return. This deduction in Netherlands is being reduced every year and is expected to be set at €3,240 by 2036.
In other words, self-employed individuals can take advantage of certain allowances and deductions to lower their Dutch income tax liability. For example:
Self-employed deduction (zelfstandigenaftrek): if you meet the hours criterion (at least 1,225 hours) and are below the state pension age at the start of the calendar year, you can claim €5,030 in 2023 in self-employed deduction.
Profit exemption (mkb winstvrijstelling): this allows you to deduct 14% of your profits, reducing the amount subject to tax.
Such deductions and profit exeption are essential for freelancers seeking to minimize their Dutch tax obligations. Keep detailed records to ensure accuracy when filing your tax return.. This deduction in Netherlands is being reduced every year and is expected to be set at €3,240 by 2036.
You can check how much income tax you will need to pay by completing the income tax return. There’s a nice calculation tool made by The Netherlands Chamber of Commerce KVK just for that.
What about that income tax return?
As a sole proprietor or a self-employed individual in the Netherlands, you need to file a tax return with the Dutch Tax and Customs Administration (Belastingdienst). Basically, this information is used to determine whether you need to pay taxes, or get a tax refund in Netherlands if you’ve paid too much. Pretty important, that is.
Usually, as a ZZP you will receive an automatic notification that you have to file a tax return. However, if that’s not the case, you may still have to file a return, for example if you have income over which you have paid an insufficient amount of taxes or no tax at all. Ensuring all your income streams are properly taxed is vital to avoid penalties or audits.
How to file an income tax return?
Thankfully, it can be done digitally these days. The return form can be found on the Netherlands government website.
Keep in mind when you’re a ZZP — and this is very important — that you need to file your income return before 1 May (in most cases), although it’s possible to apply for an extension before that date via regular mail. If you need an extension of more than 5 months in the Netherlands, prepare to explain why in your application.
A delayed filing or miscalculated return could mean additional fines, penalties, or worse — the chance of your income being improperly taxed.
Filing a tax return as a non-resident
You are a non-resident payer of tax and if you don’t live in the Netherlands but you do have assets in the Netherlands or an income on which you must pay more tax than €49. In this case, practically all of the above applies to you as well.
Non-resident taxpayers should use the C form or M form, depending on their situation. You can file the taxes return using your DigiD or if you don’t want to do it digitally, you can request a C form to reportar taxed income. If you only lived in the Netherlands for part of the year, you should use an M form.
Surely enough, there’s also an elephant in the room to be addressed by the name of double taxation. This can leave your income being taxed more than necessary. Understanding these treaties is vital to ensuring you keep as much of your hard-earned money as possible. The Netherlands has signed various tax treaties for the purpose of avoiding it, but each case is personal depending on your country of residence and/or business activity.
Health Insurance and Social Security
Enter Enty
All the details may seem a bit too much, and quite rightfully so — handling all your taxes is no easy feat. But handling taxes as a ZZP professional in the Netherlands doesn’t have to be overwhelming. Of course, you may opt to file your taxed income yourself, or you could leave it up to Enty.
Enty can take care of all accounting needs of a freelancer in the Netherlands. Our accountants, will prepare the tax report, file it on your behalf in time, while you can concentrate on business. Just upload the documents on Enty and we’ll take care of the rest.
Outside of accounting, Enty’s subscription includes a set of tools to help you manage your business easier: issue invoices, create contracts, and just ease up general workflow of your small business.
Book a free call with us and we’ll be delighted to answer all of your questions and guide you through the whole process. Or explore Enty yourself.
