Tax on assignments/commissions

You usually send an invoice for a ‘product’. If you provide a ‘service’, you make agreements with the party that offers you the work: can they or do they want to employ you or do they want an invoice? There’s more to that than meets the eye, because in order to protect self-employed professionals against clients (and to encourage employers to employ workers), the government is combatting false self-employment. Self-employed professionals need to meet certain conditions in order to be considered ‘entrepreneurs’. Otherwise, the client is at risk of receiving an additional tax assessment (plus a fine), because no contributions and tax have been paid. In order to gain clarity beforehand, you can therefore choose option A, B or D. If you are sending an invoice, you can make use of a model agreement. However, this does not indemnify the client or provide them with certainty in advance.

If you are doing a project or providing a service, you can agree to take up employment with the organisation. Your income will be taxed with wage tax every month, which is an advance levy in respect of income tax. There will probably be little that has to be settled in the case of the income tax return.

Type of income: income from employment
Tax benefits: payroll tax reduction
Administrative obligation: none
Covered by: employee insurance schemes
Healthcare insurance contributions will be deducted from your salary

You can choose to have your salary paid by a payroll company. In that case, you will actually be an employee in salaried employment with this company (the notional employer), but you will perform the service for another client. You pass on the number of hours worked and rate to the payroll company. This company sends an invoice to your client and pays your net salary to you. The payroll company arranges all the taxes to be paid, the payslips, work contracts and any pension accrual. One disadvantage is that you pay for this service. In principle, premiums for employee insurance schemes will also be deducted, which you will not always be able to use directly.

The client can opt for payment through a payroll company, because they don’t want to run any risks and don’t want to keep payroll records. Difference with a temporary employment agency: in the case of payrolling, you have to find your clients yourself. If you work through a temporary employment agency, they will offer jobs to you.

Type of income: income from employment
Tax benefits: payroll tax reduction
Administrative obligation: none
Covered by: employee insurance schemes (unless agreed otherwise)
Healthcare insurance contributions will be deducted from your salary

C.1 Sending invoices (receipts) without Dutch Chamber of Commerce registration
If you occasionally provide a service or sell something, you can send an invoice for that and not be registered with the Dutch Chamber of Commerce (Kamer van Koophandel, KVK). In that case, however, you will be referred to as a ‘resultaatgenieter’ (recipient of income from other activities). As soon as you start participating in economic transactions, however, you must register with the Dutch Chamber of Commerce. You declare your income yourself with the annual tax return. If you are not registered with the Dutch Chamber of Commerce and you do not have a VAT number, you will not charge any VAT on your invoices and you also cannot deduct any VAT from purchases.

Type of income: income from other activities
Tax benefits: deduction of costs
Administrative obligation: keep outgoing and incoming invoices
You are not insured
You will receive an assessment notice for the healthcare insurance contribution

C.2 Sending invoices from your sole proprietorship
If you are registered with the Dutch Chamber of Commerce, you send your invoices from your business. The amount of income tax you have to pay is determined when you submit the annual tax return. The Dutch Tax and Customs Administration assesses whether you are a ‘self-employed professional (zelfstandig ondernemer) or a ‘resultaatgenieter’ (recipient of income from other activities) on the basis of a number of criteria. (Do the OndernemersCheck on Dutch Tax and Customs Administration website to determine this yourself.) This has consequences for how much tax you will pay on this income. If you do not meet the criteria for ‘self-employed professional’ (zelfstandig ondernemer), but do send invoices in the name of your sole proprietorship (eenmaanszaak), the Dutch Tax and Customs Administration sees you as ‘resultaatgenieter’ (recipient of income from other activities) in that case (see C.1). In addition, you probably received a VAT number with your Dutch Chamber of Commerce (KVK) registration and you therefore also keep accounts for the turnover tax (VAT). Whether you charge VAT and which VAT rate you charge will depend on what you invoice. Find out more about this on the Turnover tax page.

Type of income: profits from business activities
Tax benefits: deduction of costs, investment credit and SME profit exemption
Administrative obligation: business records and almost always turnover tax records
You are not insured
You will receive an assessment notice for the healthcare insurance contribution

Are you a ‘self-employed professional’ and do you fulfil the hours criterion?
In that case, you are eligible for all tax benefits. You must work at least 1,225 hours per year and 50% of your working hours for your business. This is equivalent to three days per week. Take this into account if you work in salaried employment alongside your business.

Extra tax benefits: self-employed deduction and relief for new businesses (max. 3 years)
Extra administrative obligation: time records

Opting-in is meant for contractors who are not in salaried employment, are not an entrepreneur and who do not perform the work as an entrepreneur. Together with your client, you declare that you deem the working relationship to be a notional employment relationship. Therefore, there is no third party, such as a payroll bureau, involved. With opting-in, both parties therefore opt voluntarily to withhold wage tax. As a result of this, there is clarity about the relationship of authority, working relationship and taxes, premiums and contributions to be paid.

Type of income: income from employment
Tax benefits: payroll tax reduction
Administrative obligation: none
You are not insured
Healthcare insurance contributions will be deducted from your salary