It's that time of the year again: filing your income tax return. Are you getting nervous already? Don't panic. We have collected the most frequently asked questions for you. With answers, of course.
1. What is income tax?
As a FreeFlexer, you pay tax on your income, just like everyone else who earns money in the Netherlands. This is called income tax. Income tax is a tax every FreeFlexer has to deal with.
Tip: In some cases, you can be exempt from the VAT requirement. Read all about this Small Businesses Scheme.
2. Do I have to file income tax or not?
Have you already received the blue envelope from the Tax Authorities stating that you must file your income tax return? If so, you are obliged to file your tax return before 1 May. Did you not receive an envelope? In that case, you can check whether you have to file a tax return by filling out a test return on the website of the Tax and Customs Administration.
3. Is it 'profit from business activities' or 'earnings from other activities'?
For income tax purposes, there are three sources of income: 'profit from business activities', 'wages from employment' and 'earnings from other activities'. As a FreeFlexer, there is no question of 'wages from employment'. The Tax Authorities determine whether this is 'profit from business activities' or 'earnings from other activities'. They have developed a handy tool: the OndernemersCheck to help you find out whether you are likely to be assessed an entrepreneur or not.
If the OndernemersCheck shows that you are not an entrepreneur for income tax purposes, then you are 'enjoying results'. Your income counts as 'earnings from other activities'. The earnings you make, you indicate in the tax return as 'earnings from other activities'. You may deduct the costs you incur for these activities. When you're 'enjoying results', you pay an income-related contribution to the Healthcare Insurance Act (Zorgverzekeringswet or Zvw) to the Tax and Customs Administration.
If you are an entrepreneur for the income tax according to the OndernemersCheck, then your earnings are profit from business. With the handy tax return checklist, you can file your tax return quickly and easily. It also contains important information about deductions, such as the self-employed tax deduction and the starter's tax deduction.
4. How much income tax do I have to pay?
The amount of income tax you have to pay depends on several factors. First of all, it is important whether there is a 'profit from business activities' or 'earnings from other activities'.
Are you an entrepreneur for income tax purposes? Then you can make use of deductions. The profit you make - and on which you have to pay tax - depends on the turnover and costs incurred. The turnover is the amount that you have received in a year (excluding VAT). Your costs consist of all business expenses you have made in that same year (excluding the VAT that you have paid).
Are you regarded as 'enjoying results' for income tax? Then they look at what you have earned excluding VAT and you may deduct costs incurred.
The general levy rebate (heffingskorting) applies to everyone who files an income tax return. This discount is automatically calculated when you file your tax return. You may also be eligible for a study cost deduction and deductible health care costs. Do not forget to check this, it may be of benefit to you.
5. Will there be surprises afterwards?
This depends on how you handle your income. It is tempting to spend your money right after the client has paid, but do not count yourself rich. Always keep in mind that as an independent entrepreneur, you have to pay income tax.
6. I can't manage it. What do I do now?
Call in an accountant if you find it complicated or don't have time for it. He/she is aware of all the rules and advantages regarding taxes. An accountant costs on average between €40 and €70 per month.
Do you still have questions? We get it, tax is tough stuff. Ask your questions to support or check the website of the Belastingdienst.
No rights can be derived from this blog and this is not tax advice.
