Running a Business
The issues affecting a business owner in the Netherlands...
Terms and Conditions
Drawing up standard company Terms and Conditions will be helpful when undertaking business transactions. They can be printed on invoices or quotations and can eliminate the need to clarify them repeatedly.
The Netherlands falls under EU rules for small businesses invoicing. This means that a debtor generally has 30 days to settle an invoice before a late fee is applicable (no reminders are necessary when invoicing another registered business).
- More information on the rules on late payment in the EU is available on the Europa website
- When a business charges (or reverse-charges) VAT there are strict rules on what must be included on an invoice
For those on government unemployment benefits, it may be possible to start a business while receiving benefits. Additionally, some benefits available to the full-time employed are also available to the self-employed (eg. Parental Leave)
- More information on benefits while self-employed are available on the government website Business.gov.nl
A self-employed person is liable to pay all of their own insurance premiums. While none of these are compulsory (apart from basic medical insurance that all adults in the Netherlands must pay for), most small business owners take out some kind of liability insurance and often life insurance too. Disability insurance is extremely expensive in the Netherlands and the prohibitive cost makes this one of the least-bought insurance policies by business owners.
- More information on business insurance is published on the Business government website
It is very rare for a Dutch business to be able to hire staff members on a self-employed or freelance basis and employer responsibilities toward their staff are numerous.
- More information from government website Business about obligations when hiring staff
The Dutch Tax and Customs Administration (Belastingdienst) will be notified by the KvK as soon as it is certain a company plans to start trading.
Business owners are legally required to keep records of all matters concerning the finances of their company. They are also legally required to keep all records relating to taxation for a minimum of seven years.
VAT is quite complex in the Netherlands with four brackets of VAT being levied. VAT-free, 0% VAT (not the same as VAT-free), 6% VAT and the full 12% VAT. Different occupations charge different levels of VAT, and sometimes more than one bracket is applied by the same business to different services.
Quarterly (or monthly) VAT statements must be submitted even if the business earned nothing in that reporting period.
If VAT statements are not submitted, a bill will be sent for the amount of VAT nominally estimated according to the income estimate given by the business owner at their KvK registration appointment. The bill will also contain a €50 fine in addition to the estimated VAT amount. This must be paid regardless of earnings.
The Dutch tax office works on accrual accounting system, not a cash-based one. This means that all reports must declare the income that was billed for the reporting period, not the funds received during that period. In practice, this often means paying the VAT charged on invoices before an invoice is settled by the debtor.
Note: It is illegal for the Dutch Tax Office to communicate in any other language but Dutch. This includes all reporting systems, letters, phone calls, and emails. Lack of knowledge of the Dutch language is not accepted by the authorities as a reason for mistakes in administration or payments. Business owners in the Netherlands are advised to either learn Dutch, retain the services of a local accountant, or have a trusted translator.
- Additional information about retaining records
- Information on business taxes from the Dutch Tax and Customs Administration