Tax essentials for starters

When are you considered an entrepreneur by the Netherlands Tax Administration?

In this section, you will learn that the Netherlands Tax Administration distinguishes between 2 types of entrepreneurs. This is important for your tax return and tax benefits.

Are you registered with KVK? That does not automatically mean you are considered an entrepreneur by the Tax Administration. The Tax Administration distinguishes between an entrepreneur for the purposes of turnover tax , VAT and an entrepreneur for the purposes of income tax.

You may be an entrepreneur for VAT purposes, but not for income tax purposes. This distinction determines whether you can make use of tax benefits.

Would you like to know what you are eligible for? Then take the Netherlands Tax Administration’s Entrepreneur Check (in Dutch).

What taxes will you have to deal with as an entrepreneur?

In this section, you can read about the difference between turnover tax (VAT) and income tax. Find out when you need to file a tax return, what the rates are, and what the small businesses scheme (KOR) can mean for you.

Turnover tax (VAT)

VAT stands for Value Added Tax. As an entrepreneur, you charge VAT on the products and services you sell. You pay this VAT to the Tax Administration. You can think of VAT as money that you are temporarily holding on behalf of the Tax Administration. So, it is not your income. You also pay VAT yourself on the products and services you purchase.

VAT rates

In the Netherlands, there are 3 VAT rates:

• 21%

This is the standard rate and applies to most products and services.

• 9%

This is a reduced rate and mainly applies to basic goods. Examples include food, medicines, hairdressing services, and repairs to shoes and clothing.

• 0%

This rate applies in specific situations, for example, if you export goods abroad.

Some professions and sectors are VAT exempt, such as healthcare and childcare. In such cases, you do not charge VAT and cannot claim a deduction for VAT either.

Submitting a VAT return

As a business owner, you usually submit a VAT return every quarter. You then pay the VAT you have received, minus the VAT you have paid. You must do this no later than one month after the end of the quarter:

Example of a VAT return

Nora is a nail technician. She buys products and carries out treatments.

• She buys products for €300

• She pays €63 VAT (21%) on this

• In total, she pays €363

She carries out twenty treatments at €25 each, excluding VAT.

• Nora generates a total turnover of €500, excluding VAT

• She charges 21% VAT, i.e. €30.25 per treatment

• In total, Nora receives €605

• Of this, €105 is VAT (€605 – €500).

In her VAT return, she lists these amounts:

So, Nora pays €42 in VAT to the Netherlands Tax Administration.

Small businesses scheme (KOR)

Is your annual turnover less than €20,000? If so, the small businesses scheme (KOR) might be right for you. The KOR is a VAT exemption. You do not pay VAT, but you are also not entitled to claim it back. If you opt into the KOR, you no longer need to submit your VAT return every quarter. Find out if the KOR is right for you.

Income tax

Income tax works differently for business owners than it does for employees. As an employee, you pay income tax on your salary. As a business owner, you pay income tax on your profit.

You calculate your profit as follows:

All the money you earn through your business is your turnover. Subtract your costs from this. What remains is your profit. Deductions are then made from this, such as the self-employed person’s allowance. What remains is your taxable income. You pay income tax on this. The higher your taxable income, the more tax you pay.

You submit this tax return once a year, usually before 1 May. You do this for the year in which you made the profit. This means that in 2026, you will pay tax on your 2025 income.

Income tax consists of three bands. If you do not receive a state pension (AOW) in 2026, the following rates apply:

Would you like to know approximately how much income tax you’ll pay? Then use our income tax calculator. 

Have you previously filed a tax return as a business owner? If so, the Tax Administration will estimate your income and tax liability for the new year. With a provisional tax assessment (voorlopige aanslag), you pay this in instalments throughout the year. This prevents you from having to pay a large sum in one go.

Deducting start-up costs and claiming back VAT

Do you incur costs in setting up your business, even before you are registered with the KVK and the Tax Administration? These are known as starting costs (opstartkosten). You may deduct these costs from your profit when completing your income tax return. In some cases, you can also claim back VAT on these costs. You do this via your VAT return.

Income-related contribution under the Healthcare Insurance Act (Zvw)

As an entrepreneur, in addition to income tax, you also pay the income-related contribution under the Healthcare Insurance Act: the Zvw contribution. Everyone in the Netherlands pays this contribution. It is used to cover healthcare costs.

You pay this contribution on your profit after deductions. The Tax Administration calculates this for you and sends you a tax assessment after you have filed your return.

In 2026, the Zvw contribution will be 4.85%. Do you have a job as an employee and run your own business? In that case, your employer pays the contribution from your salary. You pay this contribution yourself on the income from your business.

What tax benefits are available?

Deductions are a discount on income tax. This is how the government encourages entrepreneurs. To use entrepreneur deductions, you must be an entrepreneur according to the Tax Admministration criteria.

General tax credit

Anyone who has to pay taxes may use the general tax credit (algemene heffingskorting). You deduct this discount from the amount you have to pay in income tax and national insurance contributions.

Private business ownership allowance

You can make use of the private business ownership allowance (zelfstandigenaftrek) if you work at least 1,225 hours on your business. Do you have an eenmanszaak and are you  also a partner in a VOF or in a maatschap? Then you may count all these hours. For tax year 2025, the private business ownership allowance is €2,740. For 2026 it is €1,200. In 2027 it will further decrease to €900. 

For 2026, this amount is €1,200. You deduct this from your profit when completing your income tax return.

The amount of the self-employed person’s tax allowance is reviewed each year and may change. Read more about tax rates in 2026.

Tax relief for new companies

If you are eligible for the private business ownership allowance, you are also eligible for the tax relief for new companies (startersaftrek). In 2026, you may deduct an extra amount of €2,123 from your profit in your income tax return. You may do so 3 times in the first 5 years after starting your business.

SME profit exemption

You are also entitled to the SME profit exemption (mkb-winstvrijstelling). The hours criterion does not apply. In 2025 and 2026 you may deduct 12.7% of your profit. If you also use the private business ownership allowance and the tax relief for new companies, deduct those from your profit first and deduct the SME profit exemption from the remaining profit. If your company is making a loss rather than a profit, the SME profit exemption will not benefit you.

Employed person's tax credit

The employed person's tax credit (arbeidskorting) is an amount you are allowed to deduct from your work income. For self-employed people, the work income is your profit before deducting the private business ownership allowance, tax relief for new companies, and SME profit exemption. The amount of the tax credit depends on the amount of your profit.

Learn more in the tax webinar

The Belastingdienst hosts a monthly webinar on taxes, especially for starting companies. This free webinar is in Dutch. You can apply for it via this link. 

Do you have questions about tax? Contact the Netherlands Tax Administration by phone or chat.