Dutch tax terms in plain language

A plain-language glossary of the Dutch tax and bookkeeping terms you meet as an entrepreneur — from VAT to the SME profit exemption. Written for newcomers and expats.

The Dutch tax year, deadline by deadline

Filing dates repeat every year. Missing one costs a fine even when nothing is owed, so put these in your calendar once.

1. 31 January

   VAT return Q4 (Oct–Dec)

   File and pay in the same month. The payment must be received by the Belastingdienst on the deadline, not merely sent.

2. 1 May

   Income tax return for the previous year

   The return opens on 1 March. You can request a postponement (uitstel) before 1 May — free and usually granted until 1 September; an accountant can get longer.

3. 30 April

   VAT return Q1 (Jan–Mar)

   Also the moment to check your turnover against the €20,000 KOR threshold if you use the small-business scheme.

4. 31 July

   VAT return Q2 (Apr–Jun)

   Half-year point: a good time to compare your tax reserve with the estimate in the calculator.

5. 31 October

   VAT return Q3 (Jul–Sep)

   Last full quarter to still influence this year's profit — think about investments, KIA and pension payments before 31 December.

6. Rolling

   Adjust your provisional assessment

   You may change the estimate at any time during the year. Doing it as soon as your profit shifts avoids both a large bill and interest (belastingrente) afterwards.

7. With each VAT return

   ICP statement for EU clients

   Invoiced a business in another EU country with 0% VAT reverse charge? File the ICP statement in the same period as the VAT return, with their valid VAT number.

What Dutch bookkeeping is expected to look like

The Belastingdienst does not prescribe software, but it does expect a complete, traceable and timely administration. This is what that means in practice.

• Keep everything for seven years

  Invoices, bank statements, contracts, hour logs and receipts: seven years, ten for anything involving real estate. Digital copies are accepted as long as they are complete, readable and unaltered.

• Use a separate business account

  Not legally required for a sole trader, but it is what every Dutch accountant expects. It makes private withdrawals visible and keeps an audit straightforward.

• Invoices must carry fixed details

  Sequential invoice number, invoice date, your name and address, your KVK and btw-id, the client's details, a clear description, the amount excluding VAT, the VAT rate and amount, and the total.

• Log your hours from day one

  The 1,225-hour criterion for the self-employed deduction is checked afterwards. Billable and non-billable hours (admin, marketing, travel) both count, but only if you can show a log.

• Book on invoice date, not payment date

  Dutch sole traders normally work on an accrual basis: revenue belongs to the year you invoiced it, even if the client pays in January. Unpaid invoices still count towards profit.

• Split mixed private and business use

  Phone, internet, a home workspace or a car used both ways are only partly deductible. Record the business share and how you determined it — a percentage without reasoning does not survive a check.

Handling receipts (bonnetjes)

Receipts are the weakest link in most small administrations — and the first thing checked in an audit.

• No receipt, no deduction

  A bank transaction alone is not proof. Without the invoice or receipt the Belastingdienst can refuse both the cost and the input VAT you reclaimed on it.

• Scan thermal receipts immediately

  Till receipts fade within months. Photograph them the day you get them and attach the image to the transaction — the scan is legally sufficient once the original is unreadable.

• Check that VAT is shown

  Above €100 including VAT you need a proper invoice with your name on it to reclaim the VAT. A simple till receipt is only enough for smaller amounts.

• Foreign receipts follow other rules

  VAT charged in another country cannot go in your Dutch VAT return; you reclaim it through a separate EU refund request. The cost itself is still deductible from your profit.

• Attach the receipt to the entry

  In this app you can upload a receipt with every transaction, so your archive matches your books. That is exactly what an accountant or inspector asks for first.

Glossary of terms

VAT

VAT

Also called: btw / omzetbelasting

Sales tax you add to your invoices and pass on to the tax office — it is never your money.

You charge VAT on top of your price (usually 21%, sometimes 9% or 0%) and pay it to the Belastingdienst every quarter. The VAT you paid on business purchases (input VAT) is subtracted, so you only pay the difference. Because the VAT you collect is not income, keep it aside — a common beginner mistake is spending it.

Input VAT

VAT

The VAT you paid on business purchases, which you can deduct from the VAT you owe.

When you buy something for your business, the supplier charges you VAT. If the purchase is genuinely for the business and you have a valid invoice, you may reclaim that amount in your quarterly VAT return. No proper invoice means no deduction, so keep every receipt.

VAT return

VAT

The quarterly form where you report VAT charged minus VAT paid, and pay the difference.

Most small entrepreneurs file per quarter, one month after the quarter ends (e.g. Q1 before 30 April). Filing or paying late leads to fines, even if the amount is small. If you paid more input VAT than you charged, you get a refund.

Small businesses scheme (KOR)

VAT

An exemption: with turnover under €20,000 you charge no VAT — and reclaim none either.

If your Dutch turnover stays below €20,000 per calendar year you can register for the KOR. You then stop charging VAT and stop filing VAT returns, but you also lose the right to reclaim input VAT. You commit for three years and must deregister immediately if you pass €20,000. It rarely pays off if you invest a lot or mainly serve businesses.

VAT revision (herziening)

VAT

Paying back part of the input VAT on recent investments when your VAT status changes.

If you reclaimed VAT on an investment and then switch to the KOR (or otherwise stop being VAT-liable), you may have to repay part of that VAT. The review period is five years for movable assets and ten years for real estate, counted from the year of purchase.

Income tax (box 1)

Income tax

The yearly tax on your business profit, charged in progressive brackets.

As a sole trader (eenmanszaak/zzp) your profit is taxed as personal income in box 1. The rate rises with income: a lower rate on the first slice, a higher one above the bracket limit. Tax credits (heffingskortingen) then reduce the amount you actually pay.

Profit

Income tax

Revenue minus business costs — the starting point for your tax, not what you withdraw.

Profit is all invoiced revenue (excluding VAT) minus deductible business costs and depreciation. Money you transfer to your private account is a 'private withdrawal', not a cost, and does not lower your profit.

Healthcare contribution (ZVW)

Income tax

An extra income-dependent healthcare levy on your profit, on top of income tax.

Besides your monthly health insurance premium, entrepreneurs pay a percentage of their profit as a ZVW contribution, up to a capped amount of income. The Belastingdienst assesses it together with your income tax return, so budget for it alongside your tax.

Provisional assessment

Income tax

Tax you pay in monthly instalments during the year, settled against the final bill.

You can ask the Belastingdienst to estimate your tax and collect it monthly instead of in one lump sum. If your estimate was too high you get a refund; too low and you pay the rest afterwards. Keeping it realistic avoids a nasty surprise a year later.

Tax reserve

Income tax

Money you set aside from every invoice so the tax bill is already covered.

A separate savings account where you park a fixed share of each payment you receive — typically 25–40% of profit, plus the VAT you collected. When the assessment arrives, the money is there. This app shows how much you should have set aside so far.

Self-employed deduction

Deductions & reliefs

A fixed amount subtracted from your profit if you work at least 1,225 hours in your business.

Meet the hours criterion (urencriterium) of 1,225 hours per year and you may deduct a fixed amount before tax is calculated. The amount has been shrinking every year by government policy. Keep an hour log — the tax office can ask for it.

Starter's deduction

Deductions & reliefs

An extra deduction on top of the self-employed deduction in your first years.

In three of your first five years as an entrepreneur you may add the starter's deduction to the self-employed deduction, provided you meet the hours criterion. It lowers taxable profit further, which is helpful when income is still modest.

SME profit exemption

Deductions & reliefs

A percentage of your profit that stays untaxed, applied automatically after other deductions.

After the self-employed and starter's deductions, a fixed percentage of what remains is exempt from income tax. You do not have to apply or meet an hours criterion — it is applied automatically. In a loss year it works the other way: the loss is reduced by the same percentage.

Small-scale investment allowance (KIA)

Deductions & reliefs

An extra deduction when you invest above a minimum amount in business assets in one year.

Invest more than the yearly threshold in qualifying assets (equipment, machines, a van) and you may deduct a percentage of the investment on top of normal depreciation. Assets under €450, cars for private use and land do not qualify.

Company car addition (bijtelling)

Deductions & reliefs

Extra taxable income when you also use a business car privately.

If a car on the business books is driven privately for more than 500 km a year, a percentage of its list price is added to your income. Keep a full trip log (rittenregistratie) if you want to avoid it by proving you stayed under 500 private kilometres.

Loss carry-forward

Deductions & reliefs

A loss year can be offset against profit in later years, lowering that year's tax.

A business loss can be set off against the profit of the following nine years (and, under conditions, the previous year). The offset happens automatically in your return; this app tracks how much of each loss is still available and when it expires.

Depreciation

Bookkeeping

Spreading the cost of an expensive asset over the years you use it, instead of deducting it at once.

Assets costing €450 or more and lasting several years (laptop, camera, van) are not a one-off cost. You spread the amount over their useful life — often five years, so 20% per year — minus any residual value. Only that yearly slice lowers your profit.

Deductible business costs

Bookkeeping

Costs made for the business, which reduce your profit and therefore your tax.

A cost is deductible if it serves the business: software, insurance, travel, professional training. Mixed private/business costs are only partly deductible, and some (fines, most food and drink) are limited or excluded. Always keep the invoice.

Record-keeping obligation

Bookkeeping

By law you must keep your bookkeeping and receipts for seven years.

Invoices, bank statements, contracts and receipts must be kept for seven years (ten for real estate) in a form the Belastingdienst can check. Digital copies are fine as long as they are complete and readable, which is why this app lets you attach a receipt to every entry.

Sole trader (eenmanszaak)

Admin & forms

The simplest Dutch legal form: you and the business are the same legal person.

Most freelancers (zzp) start as an eenmanszaak. Profit is taxed as your personal income and you qualify for entrepreneur deductions, but you are personally liable for business debts. Registration is at the Chamber of Commerce (KVK).

Chamber of Commerce (KVK)

Admin & forms

The business register where every Dutch company must be listed.

You register your business with the KVK and receive a KVK number, which goes on your invoices. The KVK passes your details to the Belastingdienst, which then issues your VAT numbers.

VAT identification number

Admin & forms

The public VAT number you print on invoices and website — different from your VAT tax number.

You get two numbers: the btw-id (NL…B01) for invoices and clients, and the omzetbelastingnummer used only in contact with the Belastingdienst. Using the wrong one on invoices is a common mistake for newcomers.

VOF and BV

Admin & forms

Other legal forms: a partnership (VOF) or a private limited company (BV) with its own tax rules.

A VOF is run by two or more partners who are each personally liable and taxed on their own profit share. A BV is a separate legal entity paying corporate tax, with the director-owner on a mandatory salary. Both need tailored advice — this calculator is built for sole traders.

These explanations are simplified for clarity and are not tax advice. Rules change; check with the Belastingdienst or ask Ardel for a review.