Starting as a freelance construction worker

This checklist serves as a guideline for starting as a self-employed builder. You may need to fulfil other obligations as well. Several steps can be carried out at the same time.

1. Check if you fulfil the conditions for staying in the Netherlands

Entrepreneurs who intend to stay in the Netherlands must fulfil a number of conditions. You will sometimes also require a residence permit. Our interactive tool Coming to the Netherlands as an entrepreneur can help you find out if this is true for you, and tell you what other obligations you have to fulfil.

If you plan to start doing business in the Netherlands, you may also want to apply for a business bank account (IBAN). The Dutch Banking Association has created a Quick Scan to help you find out if you are eligible. Read how it works.

2. Choose a business structure

Before you can register your business, you have to choose a business structure. Be aware that freelance and self-employed professional are not legal business structures. Most freelance construction workers start out as a sole proprietorship or sole trader, but you can also set up a private limited company (bv).

As a self-employed construction worker, you work at your own expense and risk. You can start a business or carry out a temporary assignment in the Netherlands while based in another country. Part-time entrepreneurs in the Netherlands are subject to the same rules as full-time entrepreneurs.

3. Register with the Dutch Business Register and Netherlands Tax Administration

When you start a business, you must register with the Dutch Business Register at the Netherlands Chamber of Commerce KVK. KVK will pass on your details to the Netherlands Tax Administration (Belastingdienst). Within two weeks you will receive your VAT identification number and VAT number from the Tax Administration by post. You therefore do not need to register with them separately, unless you set up a private limited company (bv). In that case, you hire a civil-law notary to take care of your registration at both KVK and the Tax Administration.

4. Demonstrate you are self-employed with a model agreement

The Tax Administration determines if you are truly self-employed, or actually an employee. Their main criteria for deciding this are the answers to these questions:

• Are you obliged to do the work yourself? In other words, are you free to let someone else do the work for you?
• Is your client in charge of how you do the work?
• Are you being paid wages? For instance, if you fall ill, does your pay continue?

If the answer to one or more of these questions in 'No', then the Tax Administration will probably not regard you as an employee.

Still, it can be hard to prove that you are self-employed and not an employee. Especially if your client used to be your employer before you started your business, and you perform a job for them that takes up most of your working hours. To prove your independence for tax purposes, you can use a model agreement between you and your client to demonstrate that you are truly an entrepreneur. In that case, your client does not have to pay contributions or payroll taxes.

5. Hourly rates, construction contracts and general conditions

To obtain assignments, you need to make quotations. Potential customers may also want to know what your hourly rate is. Make sure to set a realisitic hourly rate: not too low, nor too high. When you set your hourly rate too low, it may give the impression that the quality of your work is below standard, while a high rate may cost you potential customers. Also make sure to draw up a contract which states the general terms and conditions, to avoid uncertainties between you and your customers.

6. Tax schemes

VAT

Self-employed professionals are almost always considered entrepreneurs for the purposes of turnover tax, which means that they must charge and pay VAT on their income. Almost every entrepreneur in the Netherlands must calculate and add VAT (turnover tax, BTW) on the sales price of their products and services they provide. VAT is calculated on the price and all corresponding costs for your goods or services. This includes all shipping costs, travel costs, telephone costs, packaging costs (except refundable deposits), and similar.

However, if your turnover is below €20,000 per year, you can apply for the small businesses scheme (kleineondernemersregeling, KOR). If you participate in the KOR, you will not have to charge your customers VAT.

Income tax

Being considered an entrepreneur for the purposes of turnover tax does not mean that you will automatically be considered an entrepreneur for the purposes of income tax. The latter requires that you satisfy a number of conditions. If you do not fulfil these criteria and you are not employed by your customer, the Tax Administration regards your income as regular incidental earnings. In that case you are not entitled to claim certain tax deductions that are available to entrepreneurs. However, you may claim expenses related to your work.

Healthcare

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 your health care 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 ‘health care allowance’ (zorgtoeslag).

7. Regulations for freelance construction workers

Working conditions

If you work in the Netherlands as a self-employed professional, you will have to comply with most of the rules in the Working Conditions Act (Arbowet) and working conditions regulations. You have to comply with all of the rules relating to serious occupational risks and hazards for third parties. There are rules that focus on the health and safety of both yourself and the people you work with, regarding:

• personal protective equipment
• working at height
• working with hazardous substances
• exposure to noise
• hoisting and lifting machines

If your company performs assignments at locations involving a high safety risk, e.g. the risk of explosion, fire or personal injury, your client may ask for a Safety Checklist for Contractors (SCC) (Veiligheid Checklist Aannemers, VCA). SCC certification is used to review the safety policies of supplier companies.

Work permit for foreign self-employed professionals

Foreign self-employed professionals who want to do assignments in the Netherlands, and businesses in the Netherlands that want to subcontract work to a foreign self-employed professional must comply with the Act on the Employment of Aliens (Wet arbeid vreemdelingen, Wav). This Act contains various rules with regard to foreign self-employed professionals working in the Netherlands. If you come from outside the EU, EEA or Switzerland, you require a work permit (tewerkstellingsvergunning, TWV) to be allowed to work in the Netherlands.

8. Insurances for freelance construction workers

It is not compulsory for self-employed professionals in the Netherlands to have insurance for illness, invalidity or unemployment, unlike for employees. Therefore, they must make arrangements for these kind of social insurances themselves if they want to receive benefits if they become ill or unfit for work, for example. National insurance schemes (social security), however, do apply to them.

9. Voluntary insurance

Every self-employed professional can take out voluntary insurance against a number of business risks with an insurance company. You will find information about insurance schemes regarding disability, provision for old age, indemnity and liability on the Insurances for self-employed website (Verzekeren voor Zelfstandigen, in Dutch).

10. Financing and financial support

To start working as a self-employed professional in construction, you often need financing. It is important to indicate how much financing you expect to need. You may want to invest in tools or buy a company van, but you might also want to purchase things such as office supplies or an accounting package.

If you are in need of financial support, your municipality can offer you various forms of social benefit options under the Decree on Assistance to the Self-Employed (Besluit bijstandverlening zelfstandigen, Bbz). The Bbz offers loans, credits or low income supplements.

11. Check whether you need to participate in a sector pension fund

Self-employed professionals working in construction are usually required to take part in a sector pension fund (Bedrijfstakpensioenfonds, Bpf). The following industries require you to participate in a sector pension fund:

• Painters and decorators, glaziers
• Natural stone specialists, terrazzo and floor specialists and plastering and construction companies