Starting as a freelancer in the Netherlands
Oct 16, 2023
A lot of foreigners flock to the Netherlands for business or employment opportunities. Some actually end up doing both. Because that’s what being a freelancer really is : you run your own business and you let other companies hire your services. The Netherlands offers a lot of options and opportunities here, but the rules can be a bit opaque. Even for Dutch speakers. In this article, we will explain how freelancing in the Netherlands takes shape, what it involves and what you should be mindful of.
Where do I start?
Most freelancers start out with getting a freelance contract in the first place. You can set up your freelance business first (see further) but if you fail to land a freelance gig, or you decide to roll back into employment, you can save yourself the trouble. If you have a non-European nationality, be sure that your prospective client is allowed to be a “sponsor” for you under Dutch immigration law. This will be explained further down.
I got the contract, now what do I do?
Once you found a company that will hire your services, it’s time to set up your own shop. You will immediately have to make one crucial decision : do you start working from a BV ( a Dutch Limited Liability Company) or an Eenmanszaak (a Dutch sole proprietorship, EZ in short) ? The difference between the two is broadly as follows :
+ Easy and cheap to set up.
+ Sizable Income Tax advantages for starters.
- Personal liability for the founder.
- Hard to scale up.
- Has no shares, so cannot involve investors.
- No use of legal and tax benefits of a holding company.
In short : if you’re working as a freelancer with little or no assets, don’t plan to hire personnel or office space and earn less than € 100,000.00 per year : you're better off with this one.
+ No personal liability for the founder.
+ Pooling of assets in your personal BV, creating the possibility to draw loans or mortgages.
+ Receive dividends and sale price of shares tax-free under the so called “participation exemption”.
- Slight up front investment to set up
- Additional accounting requirements (annual accounts, VAT tax returns)
- You go on your BV’s payroll and are required to pay yourself a certain amount of salary, depending on cash flow.
In short: If you’re planning on earning € 100,000 or more, and want to use that to reinvest or use it for personal estate planning : you should consider setting up a BV.You can read a more in depth article about setting up your company here.
Aren’t you forgetting something ? I am a foreigner, remember?
That’s right. There is this slight complication of your citizenship. You are going to be subject to employment tax, after all, and for that you need a work permit. The most important thing here is nationality. The Netherlands is an EU country that offers freedom of work and residence to all other EU/EEA countries plus Switzerland and the United Kingdom at least until the end of the BREXIT transition period (31 December 2020). Also, family members of EU / EEA and Swiss nationals living in the Netherlands can join them without having European citizenship themselves. This includes spouses and (unmarried) partners. In such situations the family members may apply for verification against EU Law to request a certificate of lawful residence - if they meet the Dutch requirements from third country nationals. So in short : if you’re European, you’re good.If you’re non-European, you need to apply for a Dutch residence permit.
Depending on your situation, you need to apply for an additional Provisional Residence Permit (MVV) as well. You’re off the hook here if you have one of the following nationalities: Australia, New Zealand, Japan, South Korea, Canada, the USA, Monaco or the Vatican City. For the residence permit, the concept of sponsor enters the stage. A sponsor is a person or entity who provides you with a “reason for being here”. If you are coming as an employee, your employer is your sponsor. If you are coming for family reasons, your relative or partner in the Netherlands is your sponsor. If you are coming to study, your educational institution is your sponsor. NOTE: Not every company is allowed to be a sponsor by the Dutch government. If you cannot find a sponsor, you cannot become a resident in the Netherlands and you cannot work here. If you don’t manage to find a sponsor, we can help you with a pay rolling service that already contains this sponsorship status.
I have found a client and set up my shop. Now what?
At this point, you are running your own business. It is therefore very advisable to make sure you take care of the following(i) Make sure you use correct and up to date contracts and terms and conditions. If you have a website, make sure you show a correct privacy and cooky policy. And vis-a-vis the Tax Authorities you need some basic documents in place. Read more about that here.
(ii) As a business owner, you are going to be subject to all sorts of obligations under Dutch tax and corporate law. The Dutch Tax Authorities are very reluctant to communicate in English so for non-Dutch it is almost obligatory to hire a bookkeeper for your tax returns, especially VAT and income tax.
(iii) Be mindful of the tax rules, but also the breaks you can enjoy. There are considerable income tax advantages to be had from the EZ. Look for the “Zelfstandigenaftrek” , “Startersaftrek” and “MKB Winstvrijstelling”. This can add up to € 10,000 - € 15,000 per year (!). Make sure you comply with the rules that apply here. In short: spend at least 1225 hours per year in your EZ, have 3 or more clients, promote your business, use correct freelance agreements.
(iv) Be mindful of the rules that distinguish between employment and freelancing under Dutch tax law. The tax Authorities look careful at your actual situation. Are you working for one and the same company for a year or longer? Are you asked to lead a team? Do you not actually behave and promote yourself as a separate business from your employer? Be careful : the Tax Authorities may consider you an employee “in disguise”. This may mean they will claim additional taxes and forfeit your tax breaks mentioned under (iii). If you passed all the previous points, you should be good to go!
As a freelancer in the Netherlands, you are going to need an adequate accountant to take care of your tax and accounting compliance. For this, feel free to reach out to our accounting partners at UWBS via here. They offer accessible accounting services for a reasonable price. They usually include your personal income tax returns as a free extra service.
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