Income tax is the tax you pay on your income. Everyone in the Netherlands pays income tax, whether you are employed, receive benefits, or work as a freelancer. Income tax is calculated once a year by the Tax Authorities based on your profit. You must file your return between March 1st and May 1st.
Important:
Do you spend more than 1,225 hours per year (24 hours per week) on your business (freelancing)? This includes time spent on gigs, updating your administration, and travel time. If so, enter your profit under ‘Winst uit eigen onderneming’ (Profit from business).
Are you below 1,225 hours? This applies to most freelancers via YoungOnes. In this case, enter your profit under ‘Inkomsten uit overige werkzaamheden’ (Income from other activities). This is the easiest way for you to file.
How does it work?
Step 1 Calculate your profit. Add up all the amounts from your invoices excluding VAT. These are your earnings. You can find all your invoices in your Dashboard. Subtract all your business expenses excluding VAT. You can see what is deductible in the whitepaper on deductions. Now you know your profit.
Step 2 Log in to the Tax Authorities (Belastingdienst).
Step 3 Enter your income. Answer ‘No’ to the question ‘Are you an entrepreneur for the Tax Authorities?’ (Bent u ondernemer voor de Belastingdienst). Then enter your profit under ‘Inkomsten uit overige werkzaamheden’. This applies if you freelance less than 24 hours per week.
How much income tax you have to pay depends on your income and assets. You can see here which tax bracket you fall into and what the approximate percentage will be.
Good to know:
Did you not complete any gigs this year? You must still file a tax return. If you don’t, you may receive a fine.
The Tax Authorities may audit you. Therefore, ensure you always keep your receipts, invoices, and bank statements. There is a legal retention period of at least 7 years. You can also store your invoices and receipts using an accounting app.
