Taxes on the Self-employed
Information on the taxes that freelancers, self-employed workers and their business are likely to be subject to...
The income of self-employed people is deemed to be personal income for tax purposes. The net amount of such income, obtained after deducting tax-allowable business expenses, is subject to personal income tax (personenbelasting/impôt des personnes physiques, PB/IPP) based on a sliding scale of rates.
Self-employed people may deduct the amount of their social security contributions from their income as well as either actual business expenses or a lump-sum tax allowance.
The yearly tax declaration is via the standard personal tax return and profits are taxed at personal income tax rates, which are higher than corporation tax rates.
The self-employed person may need to register for VAT and complete a quarterly VAT return. The rules for registering for VAT depend on the type of work done. The rules are complicated and can be explained by the local VAT office, which can be found in the telephone directory under Ministerie van Financiën/Ministère des Finances.