Though most people work directly for an employer, over the past years, a considerable and growing number of people in the Netherlands have chosen to work in self-employment, to the point where, at present, 1.76 million people have self-employment as their main, or only, source of income. Of these, 900,000 are what the Dutch call ZZP-er – Zelfstandige Zonder Personeel, or self-employed persons with no employees.
The percentages show the inevitable entrepreneurial and independent nature of those who work in self-employment. The most important reasons for doing so are: needing a new challenge; wanting to be able to determine for themselves how much work they do and when; always having wanted to work in self-employment; and not liking working for a boss. A smaller group is in self-employment out of necessity: because they lost their job, the atmosphere at work was not good, or because they couldn’t find a job. It is this last category that, starting in 2017, is causing the number of ZZP-ers to shrink. Due to the economic upswing, there is an increase in jobs in employment, while employers are becoming less leery of offering a fixed contract. Also impending legislative changes governing the contracts between clients and freelancers are causing both parties to protect themselves by changing the nature of their collaboration.
As the Netherlands is a country that so easily accommodates self-employment, and that has an economy that is based mostly on the services sector, is an attractive country for also non-Dutch nationals to come and try their luck – be it as an expressly-chosen destination, or as an accompanying partner/spouse. In short, there are plenty of opportunities, practical advantages and tax benefits – but before you get started, there are a few things that are good to know, in order to be well-prepared.
First of all, whom do you turn to for information and support? There are several organizations in the Netherlands that can help you along the way.
As a country that accommodates self-employment, and has an economy based on the services sector, the Netherlands is an attractive country to try your luck
Chambers of Commerce: The Chamber of Commerce is a public institution and the information desk can provide you with information on how to start a business, which diplomas you need for your specific line of business, how to write a business plan to be able to finance your ideas and what (zoning) plans your municipality has within the area in which you want to establish your firm.
There are more than 20 regional Chambers of Commerce (Kamers van Koophandel). They register (practically) all companies based in the Netherlands, whether they are of Dutch origin or foreign: public and private limited companies, cooperative societies, mutual guarantee associations, sole traders, partnerships and associations of home-owners. Also private persons who work on a free-lance basis and persons who carry out one of the professions specified on the professions list of the Chamber of Commerce, are obligated to register. The purpose of this registration is to enable third parties to find information on a company – such as who is liable, who can make binding commitments; in other words, the legal structure of a company.
MKB-Nederland: Another institution you can turn to for information is MKB-Nederland (Instituut voor Midden- en Kleinbedrijf), an organization that represents the interests of small and medium-sized companies. Various activities are initiated by this institute, aimed at offering its members relevant knowledge and expertise as well as at improving the general position of small and medium-sized companies.
Other Institutions: Other institutions that can offer you advice are banks and the national tax office. Both have information desks for people who plan to start their own business and can provide you with the information you need. And last, but not least, all major cities have a business desk at the town hall.
Proof of Identity
When staring a company, proof of identity will be required when registering with the Chamber of Commerce, as well as an original private bank statement or an original extract from the population register (not older than one month).
The following documents are accepted as valid proof of identity:
a valid travel document (Dutch or foreign passport, European identity card)
- a valid Dutch driver’s license (a foreign driver’s license will not be accepted)
- a residence permit issued by the Dutch aliens police
- a Dutch refugee passport
- a Dutch aliens passport.
Enlisting the services of an accountant will help you benefit from the many deductions that apply to you
Setting Up Establishment
There are no specific restrictions for foreign companies who wish to start a business in the Netherlands, nor are there restrictions on the ownership of real estate or on the remission of capital and profits abroad.
There are various ways in which foreign companies can set up permanent establishment in the Netherlands, which we will describe briefly here:
- branch office
- eenmanszaak: a one-man business
- maatschap: partnership – business involving more than one person, usually used by accountants, doctors, etc.
- vennootschap onder firma (VOF): general or commercial partnership – business involving more than one person, under a common name, each severally liable
- commanditaire vennootschap (CV): limited partnership with managing and ‘silent’ partners
- besloten vennootschap (BV): private company with limited liability
- naamloze vennootschap (NV): (public) corporation.
A foreign company does not require any prior approval from the Dutch authorities to establish a branch office in the Netherlands. It does have to file various details (i.e. name, trade name, objects, manager) and documents (i.e. articles of association) pertaining to the company and the branch office with the Chamber of Commerce. The local manager of the branch office does not have to be of Dutch nationality. Insofar as the obligation to publish the annual report and accounts also applies under the law of the country of formation of the foreign company, these should be filed with the Dutch Chamber of Commerce as well.
Under Dutch law, you can set up a partnership with two or more partners: the general partnership (‘VOF’ or vennootschap onder firma) and the limited partnership (‘CV’ or commanditaire vennootschap). The basic difference between these two forms of partnership is the partners’ liabilities. A limited partnership has one or more managing partners (beherende vennoten) and one or more ‘silent’ partners (commanditaire vennoten). The liability of the ‘silent’ partners is limited to the amount of their capital contributions. Each partner in a general partnership is, in addition to the partnership itself, severally liable for the obligations of the company. Under Dutch law, a partnership is similar to a business under single proprietorship, except that there are two or more owners.
Companies with Limited Liability
In the Netherlands, corporate law defines two different types of companies with limited liability: the NV (naamloze vennootschap), which is a public company with limited liability, and the BV (besloten vennootschap), which is a private company with limited liability. The main differences between the two types of companies regard the type of shares, the need for minimum capital, the transfer of shares, the purchase of own shares and financial assistance.
The BV form is particularly suitable for a wholly-owned subsidiary, joint venture companies and family businesses. The NV is suitable for larger companies whose shares may be listed. Ask an accountant, legal or financial advisor or the Chamber of Commerce about the legal and fiscal consequences of the above forms.
Taxes Owed by Self-Employed Persons
If you run your own business you can be held liable for the following:
- wage tax
- income tax
- national insurance schemes
- employee insurance schemes (if you have employees)
- VAT (value added tax).
Self-employed persons who have no employees owe income tax and VAT. Enlisting the services of an accountant will help you benefit from the many deductions that apply to you.
Those who deliver services and goods in the Netherlands are obligated to charge their customers VAT (Belasting Toegevoegde Waarde or BTW), which they subsequently pay to the tax authorities. The general VAT rates are 21% and 6%. They owe this, no matter whether they (aim to) make a profit or not, the moment an invoice is sent out. To the delivery of goods and services outside the Netherlands, other rules apply.
However, the amount of VAT that you have paid to others who deliver their goods and services to you, can be deducted from the amount of VAT you owe. Those whose ‘VAT income’ does not exceed a certain amount enjoy a full or limited exemption from paying the amount due to the tax authorities.
The amount of VAT due should be reported on the Aangifte omzetbelasting, or Turnover Tax Return, on a regular basis (monthly, quarterly or yearly). This is done online, by means of the so-called electronic, or electronische, Tax Return. The tax authorities issue you a username and a password to do this.
Until recently, in order to avoid unpleasant (tax) surprises – for you and your client – you requested the tax authorities to issue you a Verklaring Arbeidsrelatie (Statement on Your Labor Relation). This VAR either stated that you were working as an independent person or that you were working as an employee, on the basis of a (fictitious) labor relationship. This way, your clients knew upfront whether or not they would have to withhold wage tax and/or social security contributions on the fee they paid.
This statement has been replaced by standard model contracts, drawn up by the tax authorities, which can be downloaded from their site. These contracts are valid for a period of five years and have been drawn up by the various branch organizations for specific professions. There are three types of model contracts: general model contracts, sector or profession-specific model contracts, and individual model contracts. If you work according to a contract, then your principal will not have to withhold payroll taxes for you. This is not guaranteed, however: if the tax authorities come to the conclusion at a later point in time that you have not, in fact, been working according to such a contract, they may impose a retroactive tax bill.
The implementation phase of this new system will run until January 1, 2018.
Financial Aid and Deductions
The national tax office can tell you about the Tante Agaath-regulation, a scheme that makes it fiscally attractive for private persons to lend money to those who are setting up a business. Of course, you can approach a bank and see what they can do to help you, too.
When it comes to income tax, entrepreneurs enjoy an additional deduction over and above the levy rebate that every taxpayer has a right to every year of € 7,280, irrespective of the actual profits – though it may not exceed them. To this purpose you must prove that you spent at least 1,225 hours over the past tax year working for your own business (if your spouse works for the same company there are additional rules and possible deductions). Those who are starting up a new business (startende ondernemers) have a further deduction, subject to certain conditions, over the first few years of € 2,123. If you are disabled for work and start your own company, you enjoy a generous tax deduction during three of the first five years – subject to certain conditions that you can find on the website of the tax authorities. Furthermore, tax credits are available for investments made in cultural investment funds, green funds and socio-ethical funds.
Diplomas / Permits
Depending on the type of business you want to start, there are a number of diplomas you might need. For most types of businesses, however, no diploma is required. Furthermore, some businesses are subject to a zoning plan, or require a building permit, environmental permit or establishment permit. Before you start your business, you must make sure you obtain the required permits and/or diplomas, for instance by contacting your municipality.
You can ask at the Chamber of Commerce as to what specific (type of) diploma you will need and how or where you can obtain this. If you have obtained a diploma in another country, this diploma can be evaluated by IDW, to see whether it qualifies.
There are two ways you can go about free-lancing; either as a self-employed person or through an intermediary agency. In the first case, you can read about some of the rules that apply to you in these paragraphs; in the latter case, you are, in principle, treated as an employee of the intermediary agency for tax purposes.
Permits and Citizen Service Number
Every natural person who wants to work in the Netherlands, whether in employment or self-employment, needs to comply with the Dutch entrance requirements set (if any) and must have a Citizen Service Number (burgerservicenummer), for taxation and registration purposes.
Chambers of Commerce: www.kvk.nl / ondernemersplein
Institute for Medium and Small-Sized Companies: www.mkb.nl
Tax Authorities: www.belastingdienst.nl, click on Ondernemen, then Onderneming starten