When does KVK see you as an entrepreneur?
KVK uses 3 main criteria to decide if you are an entrepreneur:
- You supply goods and/or services.
- You charge more than a nominal/symbolic fee for this. You earn money from it.
- You regularly do business with other people, not just friends and family. You also compete with other entrepreneurs who provide the same or similar services or products.
Please note: The Tax Administration uses different conditions to decide if you are an entrepreneur. Therefore, it is also good to ask yourself these 4 questions:
- Will you invest money and/or time to start or grow your business?
- Is it a one-off job or will you regularly work on your own business?
- Will you work for more than one client?
- Do you decide when and how you do your work?
Your answers will help you decide if you should register your business with KVK.
How do you know who your client is?
A client is the company you work for as an entrepreneur. You send an invoice to them asking for payment, for example. You can also make a model agreement with a client to prevent false self-employment.
Sometimes it is not entirely clear who your client is. For example, if you are a self-employed person and you start working for an intermediary or agency. Such as a platform or secondment agency. In that case, either the agency or the business that hires the agency is your client:
- Does the agency only act between you and another company? Then the company where you will be working is your client. You enter a suitable model agreement with them. You only sign an agreement for mediation with the agency.
- Will you work directly for the agency at a company? Then the agency is your client.
When are you an entrepreneur for VAT purposes?
When you register your business with KVK, your details will be passed on to the Tax Administration. To assess if you are an entrepreneur for turnover tax (VAT) purposes, the Tax Administration considers the following points:
- Do you practice a profession or run a business independently?
- Do you have regular income?
- Do you have income in addition to your permanent job?
- Are you trying to earn money from an entitlement or assets, such as savings, investments, or a house or holiday home?
Are you an entrepreneur for VAT purposes? Then you are not automatically an entrepreneur for income tax. This is because the Tax Administration considers different conditions for income tax purposes.
Are you eligible for the Small Businesses Scheme (KOR)?
Is your business registered in the Netherlands? And is your annual turnover less than €20,000? Then you can participate in the small businesses scheme (KOR). If you do so, you do not charge VAT to your customers. This simplifies your administration. Learn more about using the small business scheme.
When are you an entrepreneur for income tax purposes?
You may be an entrepreneur for income tax purposes if you provide products or services in exchange for payment. And if you expect to make a profit. Do you only do business with family or friends? Or as a hobby? Then you are not an entrepreneur for income tax purposes.
The Tax Administration decides if your income is ‘profit from business activities’. If yes, you are an entrepreneur.
The criteria to determine this are, for instance:
Independence: are you in charge of how you arrange your work? Do you determine your prices? Do you use your own materials, tools, or equipment?
Business risk: are you liable for your business debts? Do you run a financial risk if your business does not go well?
Continuity: do you invest time and money to find new customers? Do you have enough funds to run your business for some time?
Business size: do you have multiple clients? What is your average yearly turnover?
Check if you are eligible for deductions and allowances
If you are an entrepreneur for income tax purposes, you can make use of special schemes. For instance: the entrepreneur allowance, the SME profit exemption, the private business ownership allowance, and the small projects investment credit (KIA). Be aware that you can only benefit from these schemes if you also meet the time criterion.
Not an entrepreneur, but enjoying results
Are you not considered an entrepreneur for income tax? But you do have income as a self-employed person? For example, as a delivery courier or for other one-off services. Or if you sometimes do freelance work next to your main job. Then you are said to be ‘enjoying results’. Your income counts as ‘earnings from other activities’.
You cannot claim any of the special tax schemes for entrepreneurs for income tax. However, you are allowed to deduct the costs you incur for your activities from your profit. And you may still be an entrepreneur for VAT purposes.
Are you self-employed? Avoid false self-employment
If you register as a sole proprietorship, there are rules for how independent you are. According to the Employment Relationships Deregulation Act (wet DBA), the working relationship must be appropriate. For example, does your client determine how you do your work? Or are you paid when you are on holiday or ill? If so, you may actually be in paid employment. This situation is called false self-employment. Learn how you can avoid false self-employment.