New, Heavier Tax Burdens for Freelancers in the Netherlands

By: Together Abroad 19-02-2015 2:24 PM
Categories: Enterpreneurs news, Tips for internationals,

Many may be surprised to know that freelancers unlike most traditional workers in The Netherlands are required to pay taxes on their income before it is actually received. As if this long-standing regulation is not binding enough, the government has now placed additional constraints on freelancers that may generate billions in tax revenue per year.
Income tax for freelancers in The Netherlands, it seems, is an unsettling balance between efficient planning and pure chance. While most employees are taxed via the pay-as-you-earn (PAYE) income withholding, freelancers however, are taxed via voorlopige aanslag (provisional assessment) and pay income tax on earnings in-advance of them ever being received.

Each year, the belastingdienst (Dutch tax administration) calculates the expected net income of each freelancer through the voorlopige aanslag and requires payment of income tax in equal monthly installments for that year. If freelancers’ actual income is less or more than the pre-determined amount, they are either compensated what they overpaid or charged interest on the income that’s above the calculated amount.

To make matters worse, in 2014 the government added a clause to the Algemene Wet Inzake Rijksbelastingen (General Tax Act) which allows hefty fines to be levied when actual net earnings are inconsistent with those forecasted. The measure is said to discourage freelancers who deliberately overestimate their earnings. However, it also stands to bear a harsh penalty on those without consistent income.

The new regulation currently has no stated parameters of applicability, therefore the decision to impose a fine rests solely with the individual tax inspector – leaving freelancers little room for safeguard. With work for most freelancers either unpredictable or seasonal, one can imagine the potential financial burden these constraints could unload on those without work or a steady client base.

Those affected by the regulation are not too happy with the added pressure. Dutch freelance writer Myriam Young, states: "This clause is effectively a license for the government to dip into freelancers’ pockets whenever they fancy pulling in some extra cash.” She also reports that the Dutch government recently brought forward income tax paymentsfor 500,000 freelancers in December 2014 – effectively indebting them with two income tax bills for the year. Driving the nail even deeper, a recent attempt to remove the zelfstandigenaftrek, which would have cost each freelancer around a crippling €3,000 a year, was recently thwarted.

If freelancers are able to meet this new obligation, it stands to cede billions of euros to the Dutch government in 2015, bypassing the hungry market economy. These regulations will also impact local and international businesses in the Netherlands, who would ultimately have less spending power as a result of these increased revenues from freelancers.
Freelancers and entrepreneurs are indeed a vital part of the Dutch economy, offering diversity and excellence in products and services across the country.

By Jerry L. Grimes, Jr.

This article is restricted. You have to be logged in to be able to add further reactions.

Our Career programs assist you to Get hired

For an expat moving to the Netherlands, getting the right direction is very important. It's important that one knows which steps and direction to take. Linda is an exceptionally talent counselor, her advice has helped me land a job within a week of coming to the Netherlands. I am grateful for her mentoring and look forward to a great working relationship in the future.

Dr. Hrishiraj S | Clinical Research & Affairs Manager

Together Abroad provided expert advice on personal branding including developing a top-notch, market-aware CV, highly tailored job applications, and approach strategies with potential employers in the Netherlands. Furthermore, I found them be highly knowledgeable in key related fields such as recruitment strategy, immigration law, contracts, labor agreements, and (un)employment benefits. I would recommend Together Abroad to anyone who needs professional help with transitioning to a new career.

A. Aboufirass | Structural Engeer

Linda is a big mind. She thinks about things that the rest normally overlook. The insight she has about the dutch job market can only be achieved through years of experience and persistence.

Her business savvy is complemented by her mastery of understanding the client's needs and requirements. For my career I could say, she was the “Mary Poppins”, who guided me through thick and thin and helped me to land a career in the Netherlands

S. Bhattacharjee | FP&A Manager

If you are going to enlist the services of a "Career Coach" look no further. The only person you want in your corner is Linda van Orsouw. As an expat, you absolutely want to work with a highly skilled and knowledgeable professional who knows their way around the Dutch career/employment/job market. Linda assisted me in writing and positioning my CV, helped me organize and prioritize my list of opportunities, coached me through mock interviews and was there when I got offered a senior position only 2 months later. When asked I will only refer to Linda and "Togetherabroad".

Mr. C. Joubert
Lead Workplace Strategy Consultant 


New item