How does income tax work for entrepreneurs?

In the Netherlands, we have two main different types of tax as an entrepreneur. The
first is sales tax, or value added tax (VAT). The second
type is income tax. In this blog you will read what exactly the income tax entails and
how the system behind it works.

The difference between the employee and the entrepreneur

The Dutch are generally not very keen on sharing exactly what they earn
. Despite not being very open about this, you yourself have probably heard from another
what he or she earns or has earned. Let's assume for a moment that this person in question gave
that they earned 2500 euros. That 2500 can be either gross or net.
Gross income is taxable income for tax purposes. This means that from this amount
tax still has to be paid. The employer is responsible for paying this.
As a seller on bol.com, you are an entrepreneur. You are responsible for paying the tax to
. You are your own boss and the profit you make is
also directly your salary. So, for example, if you and another entrepreneur have a V.O.F.
and at the end of the year make 150,000 euros net profit, then 75,000 is the salary for
you as entrepreneur.

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Two discs

The amount of tax you pay is calculated in the same way as for a
employee. Only the basis for the amount to be paid is your profit as mentioned above.
In the Netherlands we work with a number of tax discs that have a leveling effect.
These may change every now and then in terms of the rate and from what point you enter a
new disc. These brackets determine how much tax you have to pay. At this
moment we have a two-disc system in the Netherlands. Important for you to know as a seller
on bol.com. The first bracket runs up to an income of 68,507 (bracket 1). From there
, 37.35% tax is levied. Above the amount of 68,507 (bracket 2), you pay 49.50%
tax.

A practical example

With the above V.O.F. you and your partner have managed to realize 150,000 net profit
. Assuming that the division is 50/50 you are entitled to 75,000 euros. That means
that you will be taxed over both brackets. Below is the calculation of how much
tax has to be paid.

Tax payable on bracket 1: (68,507/100) X 37.75 = 25,861.39

Then you reduce your profit by the entire base amount of bracket 1. So from your
75,000 profit you deduct 68,507 euros. You will then be left with 6493. This amount is taxed at the
rate of bracket two.

Tax payable on bracket 2: (6493/100) X 49.50 = 3214.03

You add these two calculated amounts together. That's the total amount of tax you have to pay
. Together that makes 29,075.42. That's quite an amount. Fortunately, the
Dutch government helps entrepreneurs through a number of deductions to which you are entitled. In
this blog you can read more about that.

TIP

Also pay attention to imports from abroad and related taxes, read all about it.