These are 3 examples that all come down to the same question: do I need to register at KVK? If I am not registered, I cannot send an invoice, or can I? And does that mean I am working illegally? How much money am I allowed to earn ‘on the side’ with undeclared work (‘zwart werken’ in Dutch)?
If you google ‘self-employed job’, you get so many hits and different replies that even experienced advisors can get confused. There are some rather persistent misconceptions when it comes to registration with KVK, undeclared work, and paying taxes. The best advice is to go back to basics: in essence, the answers are really straightforward.
When it comes to work relationships in the Netherlands, there are only 2 flavours: employment and self-employment. The circumstances determine which one applies to you. You work in employment if you receive wages for carrying out personal tasks (work that cannot be done by just anyone) under the authority of your employer (there is an employer-employee relationship). If 1 of these criteria is missing, you are self-employed. And if you are self-employed, also known as a freelancer or the Dutch ‘zzp’er’, you may have a business.
You are a self-employed professional if do the following on a regular basis:
- You provide products and/or services against payment, and at your own cost and risk;
- You openly promote yourself and what you offer;
- You invest in the business; and
- You take part in regular commercial transactions: others besides family and friends are your clients.
KVK registers businesses. If you run a fulltime business, you need to register with KVK. The same goes for a part-time business, that you run while you also have a job. This is where it gets tricky: when are your activities considered a hobby, and when do you have a business?
In reality, it comes down to the criteria drawn up by KVK and the Dutch Tax Administration. You can read all about those in the article When do you have a business?
Let us go back to the examples. KVK does not consider any of the 3 cases a business. These persons do not have to register with KVK, and they can send an invoice or bill for the services/products they offered. You are allowed to make extra money. Whether or not you need to charge VAT, and how the income should be declared is up to the Tax Administration. It has its own criteria.
Depending on the Tax Administration’s assessment, you declare the income as ‘income from other work’ or as ‘business profit’ on your income tax return. You pay taxes either way. No working ‘under the table’, everything above board. The idea that earning a certain amount of money ‘zwart’ (illegally) would be allowed truly is an urban myth.
This is one certainty of working in the Netherlands: employed or self-employed, registered with KVK or not, you will always pay taxes.