If the Dutch Tax and Customs Administration considers you to be an entrepreneur for income tax purposes, you will pay income tax on your business's profit. Various criteria apply to this process. For instance, if your activities are conducted in an economic setting, if you can expect to make a profit, if you work independently and at your own risk, then you are probably considered to be an entrepreneur in terms of income tax.
Entrepreneur for income tax purposes
When you register your business with the Chamber of Commerce (KVK), the Dutch Tax and Customs Administration (Belastingdienst) will assess whether you fulfil the requirements. For income tax purposes, income is divided into 3 groups (which are called 'boxes'), each with its own rate (in Dutch):
- Box 1: taxable income on wages and property.
- Box 2: taxable income from a substantial business interest.
- Box 3: taxable income from savings and investments over €50,000 (or €100,000 with your tax partner).
Your business's profit is part of your 'income from wages and property' (box 1).
Healthcare insurance premium
Entrepreneurs and self-employed professionals also have to pay an income-dependent contribution for healthcare insurance to the national government. This contribution is on top of the premium that you pay to the healthcare insurer of your choice. The higher your income, the higher your contribution will be. You pay the contribution by means of a tax return. You may be eligible for an allowance towards the costs, known as 'healthcare benefit' (zorgtoeslag).
File your return
As an independent business person, you must file your return digitally before 1 May of each year either via the Dutch Tax and Customs Administration's website, by using tax return or accounts software or via a tax intermediary. Are you an employer? You must make sure your employees receive their annual income statement in time, well before 1 April, so they can file their private tax return before 1 May as well.