Deductions, subsidies and tax breaks for ZZP

Self-employed income tax in the Netherlands

The Belastingdienst (Dutch tax administration) applies various criteria to determine whether you are an entrepreneur; such as how many customers your business has, what activities it carries out, whether it makes a profit and how much, etc. If you meet these criteria, you will have to pay income tax.

Tax for self-employed and self-employed traders in the Netherlands

Self-employed professionals ( zelfstandigen zonder personeel - ZZP ) that qualify as entrepreneurs may choose to use a sole proprietor (eenmanszaak) to carry out their activities. This means that your business is not a legal entity and no distinction is made between your personal and business assets. You will therefore have to pay tax on the profits of your business.

Deductible expenses and tax breaks for freelancers

Costs for equipment, travel, marketing, legal, accounting and third party services can be deducted as business expenses. However, dinners, gifts and study trip costs are only partially deductible. Clothing, fines and personal devices and computers are not deductible. If you need a car for your business, then you have two options. You can use your own private car for business or you can put a car on the company balance.

As an unlimited liability company, contractors and self-employed individuals can also claim certain contractor benefits such as investment allowance, tax deferred retirement reserve and contractor allowance (tax credits) such as:

• Private property allowance for businesses : ( zelfstandigenaftrek ): If you pay income tax in the Netherlands, you will be eligible as an entrepreneur and this will reduce your taxable income;
• Tax exemption for new companies ( startersaftrek ): this is an increase in the business ownership allowance for new companies;
• Small Business Scheme ( kleineondernemersregeling - KOR): If you are eligible for the small business scheme, you pay less VAT;
• Microcredit : is available for (start-up) businesses in need of a loan or guidance. This scheme consists of a loan of up to EUR 50,000 and coaching;
• SME profit exemption ( MKB-winstvrijstelling ): is a deduction allowed for small and medium-sized enterprises. The number of working hours for your business is irrelevant in this respect. After deducting the above allowances from profits, entrepreneurs are entitled to an additional tax allowance of 14%.

Criterion of hours worked

However, in order to qualify for the above-mentioned allowances, you must meet the hours worked criterion: you must be active for at least 1,225 hours per year (approximately 25 hours per week). This includes hours spent in travel, market research and administration. In your first year, it's smart to keep managing your work schedule. Exceptions are made if you are pregnant, for example.

The contractor's allowances described above cannot be applied by a limited liability company.

Depreciation

Dutch tax law includes specific rules on the depreciation of assets.

For goodwill, depreciation for tax purposes is limited to 10% of the purchase price per year . On the other hand, most investments (inventory such as computers, desks, equipment and tools) have a maximum depreciation rate of 20%. Depreciation of assets lasts a maximum of five years. However, if the cost of your business asset is less than €450, you are allowed to deduct the full amount from your earnings on your tax return.

Deductions when working from home

If you rent commercial premises, the costs you pay are tax deductible. However, if you work from home, things can get complicated and you will only be able to deduct the costs if the following applies:

• Your office space is in a separate part of the house with separate access (some specific criteria are required by the tax authorities);
• At least 70% of your income is earned there (if you also have an office elsewhere);
• At least 30% of your income is earned there (unless you have an office elsewhere).
  zzp deductions and subsidies