As a freelancer, you become your own entrepreneur! To become your own entrepreneur, you need a VAT ID (btw-ID). You can apply for a VAT ID at the Chamber of Commerce (Kamer van Koophandel in Dutch) or the Tax Authorities (Belastingdienst in Dutch). Are you still in doubt? Read the differences here.
As your own boss, you will also do your own taxes. As a freelancer, you have to deal with two taxes:
Turnover tax (VAT return) (omzetbelasting) | You will receive 21% VAT on top of your hourly rate. Unfortunately, you are not allowed to keep this. Every quarter you do the turnover tax to remit the VAT received to the Tax Authorities. In this article, you can read how the sales tax works.
As a freelancer, you can also make use of the Small Businesses Scheme (kleineondernemersregeling, KOR). You can use the Small Businesses Scheme when you have less than €20.000 turnover per year. If you use Small Businesses Scheme, then you get a VAT exemption. The turnover tax is then completely eliminated for you.
The income tax (inkomstenbelasting) | Every working Dutch person has to deal with the income tax. If you are employed, your employer has already done the income tax for you. Because as a freelancer you are your own boss, you have to do this yourself. You do the income tax before May 1st of each year, and here you declare what your income from freelancing has been for the previous calendar year. In this article, you will find a handy white paper that explains step by step how to do the income tax.
