Tax essentials for starters

Taxes for entrepreneurs

To find out which taxes and schemes are relevant for you, check whether the Netherlands Tax Administration - the Belastingdienst - views you as an entrepreneur with the OndernemersCheck. This tool is only available in Dutch. The article When do you have a business? may also prove helpful.

Turnover tax and the VAT-return

Entrepreneurs have to file VAT or turnover tax returns. Good to know: the Dutch terms btw and omzetbelasting mean the same thing. The VAT return is referred to as btw-aangifte or aangufte omzetbelasting. You charge VAT on the products or services you provide, and then pay it to the Belastingdienst. Most entrepreneurs have to file every 3 months. You have 1 month after the end of the quarter to do so. So, if you need to file your VAT return for the first quarter of a year, the deadline for filing – and paying – is 30 April.

The Netherlands works with 3 VAT tariffs: 

• 21%
  The standard tariff is 21%, also called the high tariff. This tariff applies to most entrepreneurs. 

• 9%
  The 9% applies to a limited number of services: hairdressers and shoemakers, for instance. Check the Tax Administration website (in Dutch) to see if this rate applies to your services.
• 0%
  The 0% VAT tariff applies when you provide goods or services within the EU. Your client pays the local VAT, not the Dutch VAT. 

VAT exempt

Some professions are exempt from VAT. Examples are physical therapists, nurses, and childcarers. If you practice one of these professions, you do not charge VAT. Nor can you deduct the VAT you have paid.

Example of a VAT return

Nora is a pedicurist. She purchases footcare products and gives treatments.

She spends €300 on stock purchases. She pays €63 in VAT (21% of 300). Including VAT, Nora has spent €363 on inventory.

She has given 20 treatments at €25, in total €500, VAT excluded. VAT included, she charges her customers €30.25. Her turnover is €605. That means she has received €105 in VAT (€605 - €500).

In her VAT return, she lists these amounts:

What is income tax?

If you work for a boss, you pay income tax on your wages. If you are an entrepreneur, the Belastingdienst calculates how much income tax you have to pay on your gross profit. This calculation is done in the year after you have made the profit. So, you pay income tax on your 2024 profit in 2025. 

The Belastingdienst uses your turnover to calculate your income tax. Turnover is the money you make. You deduct the costs you make for your business from that. What is left is the gross profit. If you make more profit, you pay more tax. 

This article features a fictitious calculation example of an income tax return for a self-employed professional without staff (zzp’er). Do you want to calculate how much income tax you have to pay? Use the Income tax calculation tool. The tool shows you how the new tax tariffs affect your income. It is important to put aside money for this.

The income tax for 2025 is based on 3 boxes. Until you reach the state pension age, these tariffs apply:

• Box 1
  35.82% over the taxable income up to €38,441
• Box 2
  37.48% over your taxable income between €38,441 and €76,817 
• Box 3
  49.5% over everything you earn over €76,817

The income tax for 2023 and 2024 was based on 2 boxes:

• Box 1 
  Tax year 2023: 36.93% over the taxable income up to €73,031
  Tax year 2024: 36.97% over the taxable income up to €75,518
• Box 2 
  Tax year 2023: 49.5% over everything you earn over €73,031
  Tax year 2023: 49.5% over everything you earn over €75,518

Taxable income is your profit minus costs and deductibles, such as the entrepreneur allowance. See the income tax return example further down on this page. 

Deductibles: tax schemes for entrepreneurs

Deductions are a discount on income tax. This is how the government encourages entrepreneurs. To use entrepreneur deductions, you must be an entrepreneur according to the Belastingdienst criteria.

General tax credit

Anyone who has to pay taxes may use the general tax credit. You deduct this discount from the amount you have to pay in income tax and national insurance contributions.

Private business ownership allowance

You can make use of the private business ownership allowance if you work at least 1,225 hours on your business. Do you have an eenmanszaak and are you  also a partner in a VOF or in a maatschap? Then you may count all these hours. For 2024, the private business ownership allowance is €3,750. For 2025 it is €2,470.  

Tax relief for new companies

If you are eligible for the private business owner ship allowance, you are also eligible for the tax relief for new companies scheme. In 2024 and 2025, you may deduct an extra amount of €2,123 from your profit in your income tax return. You may do so 3 times in the first 5 years after starting your business.

SME profit exemption

You are also entitled to the SME profit exemption. The hours criterion does not apply. You may deduct 13.31% of your profit in 2024. For 2025, it is 12.7%. If you also use the private business ownership allowance and the tax relief for new companies, deduct those from your profit first and deduct the SME profit exemption from the remaining profit.

An example of an income tax return for 2023

Karim is a self-employed interior decorator. He has been registered at KVK as an eenmanszaak  since 2020.  Karim has spent more than 1,600 hours on his business. His hourly rate is €50, and he has made 900 billable hours. Billable hours are hours Karim can charge his clients for services rendered. This is an example of his profit calculation¹ and the amount of income tax he had to pay over 2023.

Employed person's tax credit

The employed person's tax credit ('arbeidskorting') is an amount you are allowed to deduct from your labour income. For self-employed people, the labour income is your profit before deducting the private business ownership allowance, tax relief for new companies, and SME profit exemption. The amount of the tax credit (in Dutch) depends on the amount of your profit.

What is the income-dependent health insurance contribution?

Besides the monthly health insurance premium, you also pay an income-dependent health insurance contribution (Zvw bijdrage) of 5.32% in 2024. The premium is calculated over your business' taxable profit.

Taxable profit is calculated like this: Profit from business - private business ownership allowance - tax relief for new companies - SME profit exemption = taxable profit.

The Zvw contribution is calculated by the Belastingdienst  after you have filed your return. But Karim can expect an assessment of 1,182 euros in Zvw contributions, based on this calaculation example.  

What is a provisional assessment?

If you have filed an income tax return before, the Belastingdienst can estimate how much turnover you will have in 2025, and how much income tax you will have to pay. A provisional assessment means you pay your income tax and health insurance contribution in instalments. The advantage: you will not have to pay the full amount in one go.

The small businesses scheme (KOR)

Is your turnover less than €20,000 per calendar year? Or has it decreased to less than €20,000? Consider using the small businesses scheme, the KOR.

The KOR is a turnover tax exemption. You can register for it with the Belastingdienst. With the KOR, you do not charge VAT on the goods or services you sell. Nor can you deduct the VAT on expenses. You have less administration and do not have to file a VAT return.

Learn more in this tax webinar

The Belastingdienst hosts a monthly webinar on taxes, especially for starting companies. This free webinar is in Dutch. You can apply for it via this link.