Every entrepreneur in the Netherlands must file a sales tax return. Whether you are a starting entrepreneur or a multinational, everyone will have to pay VAT to the government. Self-employed VAT does not exist, but as a self-employed person you have to file a tax return just as the large multinationals do. Fortunately, your tax return is a bit simpler and [...] tools to help you with that.
Most made mistake.
To get straight to the point, we'll start with the most common mistake made by starting entrepreneurs. This is the first VAT return as an entrepreneur. You think, I have no turnover yet, so no tax return. Or you don't think about it at all and you forget about it.
Do not!
Even if you have no turnover, you must file a VAT return every period. If you do not do this, the Tax Authorities will make an estimate for you of what is normal in your industry, for example €5,000 in that period, and then you may pay 21% VAT plus a fine. That's scary!
Fortunately, you can correct this by filing a tax return. Then only the fine remains, but fortunately it is manageable the first time, think of it as learning money.
Freelancer btw
Just like any entrepreneur, you have to pay VAT if you work as a self-employed person or as a freelancer. Freelancer VAT does not exist, of course, nor does self-employed VAT. Value Added Tax, or VAT, is the same for everyone. Namely, if you add value, you pay tax on it.
The easiest example is making a table. You buy wood for €100 and sell the table for €200. Your added value is then €100, on which you pay tax.
In practice you charge €200 + 21% VAT = €242 for the table. So you have to pay €42.
Your purchase was €100 + 21% VAT = €121 for the purchase. You can ask for €21 back.
And then you arrive at €42-€21 = €21. Which is the same as €100 x 21% VAT.
VAT rates
There are 3 VAT rates in the Netherlands, high, low and exempt. The high rate is 21%, this is what you normally pay as an entrepreneur.
If you fall into certain categories, such as selling food, you charge the low rate of 9% VAT. See the explanation of The tax for the details.
Some services are exempt from VAT, for example in healthcare, but also in financial services. See the information here again The tax.
You can assume that you normally add 21% VAT on your invoices. That's the usual rate. If you do this incorrectly or incorrectly charge the wrong rate, you may be fined and have to pay the difference. So make sure you do your research carefully if you don't think you have to pay 21%.
VAT return self-employed
As a self-employed entrepreneur you must therefore (almost) always file a VAT return. Fortunately, there are several tools here to make that very easy, such as the free one Gecko but also e-bookkeeping or Hassles.
How you do it is less important, but it is that you keep track of it from the very first moment!