As a recruitment company operating in the European Life Sciences industry, Panda International collaborates with many professionals who are currently or planning on working as a freelancer in The Netherlands. This can be a complicated process, especially for non-Dutch professionals who aren’t familiar with the Dutch regulations. That’s why we decided to get our compliance expert, Brian Daley from Crescenzi Consulting, to provide an easy-to-read guide on everything you need to know to become a freelancer in The Netherlands.
When you become a freelancer in The Netherlands, you essentially become self-employed, (zelfstandig ondernemer). This is a very common way of working in The Netherlands and it is growing in popularity every week. At the end of 2013, the Central Bureau for Statistics recorded 800.000 self-employed professionals registered in The Netherlands. Here is what you need to know before starting as a freelancer in the Netherlands:
1. Forms of Self-Employment and Liability
The first thing to do when starting up as a freelancer is to decide which legal form of self-employment suits your business best. These are the different types of entities; each entity comes with its own specification:
- You will become an independent entrepreneur without personnel, also called ‘zelfstanding zonder personeel/ ZZP’
- You are personally liable
Partnership under a Common Firm (VOF)
- You will start the VOF together with other freelancers
- Partners are each personally liable
- You enter a partnership with different freelancers and or Limited companies
- Regarding liability, it is advised to set up a ‘Maatschap contract’.
Private Company with limited liability or ‘Besloten Vennootschap/ BV’
- You start a legal entity held by at least one shareholder
- In principal not privately liable, only in the case of identified fraud
As a freelancer in The Netherlands, the following conditions should apply:
- you work at your own risk (and you are responsible for all profits and losses)
- you work for payment that is made fully and directly to you
- you decide on your choice of work, working conditions and payment rate
When you start up as a freelancer in The Netherlands, regardless of the business form, you need to register your business in the trade register of the Chamber of Commerce (called the KVK). The entries in the trade register are open to review by the public. Having registered at the KVK you will automatically receive a BTW number (VAT number) from the Dutch Tax Authorities (Belastingdienst).
As a freelancer in The Netherlands, you are subjected to Dutch wage tax and personally responsible for its filing with the Dutch Tax Authorities. Here is a breakdown of the tax legislations in The Netherlands, divided between Limited Companies/ sole-trader/ partner.
A Dutch BV
- The company is subject to corporate income tax on its worldwide income.
- The corporate income tax rate is 20% on taxable profits below €200.000 and 25% on taxable profits exceeding that amount.
- There is also the possibility to negotiate advance tax rulings from the Tax Authorities.
- Dutch corporate income tax returns has to be filed each financial year, within 5 after that financial year. This filing deadline can be extended upon request.
- The Dutch corporate income tax due must be paid within 2 months after the date of the assessment. Provisional assessments are issued for the current tax year (based on the company’s taxable profits in the previous tax year).
A Sole Trader or Partner
- You or the partnership will be subject to Dutch wage tax
- Dutch wage tax is progressive up to a maximum of 52%.
- Tax Returns are due in by the 31st of March for the previous Tax Year (although many accountants secure extensions to this deadline).
For foreign nationals working as self-employed contractors in The Netherlands: If you decide upon this route, it will not be possible to qualify for the 30% ruling, which entitles foreign nationals to 30% tax relief on their income if they are working as employees. If you come to The Netherlands as a self-employed contractor it will not be possible to subsequently switch to employee status and still qualify for the 30% ruling. (For more information on the 30% tax ruling, click here.)
5. Social Insurance Benefits
Freelancers in The Netherlands may qualify for the following social insurance benefits:
- old age pension, the amount of which depends on the entitlement built up (2% per year)
- child benefit
- means-tested child allowance
- surviving dependant’s benefit
- exceptional medical expenses
However, they are not insured against:
Anyone starting up a new business takes risks and to some extent you can insure against these risks. In the world of contracting, insurance is an unavoidable overhead and one which most recruitment agents insist upon. At Panda International, we require candidates to have professional indemnity and public liability insurance. We are able to provide additional information when necessary.
7. VAR Certificate
Many agencies won’t work with self-employed contractors unless they have a current Declaration of Independent Employment status (VAR). For this reason, having the VAR certification in place is a crucial document for all freelancers. Freelancers can apply to the Tax and Customs Administration for this certificate, with which they can show agencies and clients that the Tax and Customs Administration recognizes them as self-employed. We strongly recommend to have a VAR certificate in place; you can find out more about the VAR certification status by clicking here.
The VAR is currently in the process of being succeeded by a new BGL system which will require agencies to verify the information in a contractor’s application in an online module. As soon as more details are available, this article will be updated.
If you have any comments or questions on becoming a freelancer in The Netherlands, please feel free to add them in the box below…
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