[OPENING TUNE]
NADIA-JANE BRISTOLL: Everyone living, working...
...or running a business in the Netherlands has to pay taxes.
What types of taxes do businesses in the Netherlands have to deal with?
And can entrepreneurs benefit from tax deductions or allowances.
I will be discussing this with Ian van Haaren...
...from the Dutch Tax and Customs administration...
...and with Israeli entrepreneur Avishai Trabelsi...
...founder and CEO of Quicargo who set up his company in the Netherlands.
Welcome to you both. Good to have you here.
Ian, I would like to start with you.
What kind of taxes do you have to keep in mind...
...when you want to start up your company here in the Netherlands?
IAN VAN HAAREN: When you move to the Netherlands...
...you will be dealing with VAT, income tax, corporate income tax, wage taxes.
That all depends on a classification of your income...
...and what it is you exactly do.
NADIA-JANE BRISTOLL: How did you prepare yourself for taxes, Avishai?
AVISHAI TRABELSI: The first time I moved here...
...I hired an accountant in order to avoid any things that I don't know.
For me it is a foreign country and I needed to forget everything else.
It is always easier to do it with an accountant.
So it was quite easy.
The process itself was not so difficult for us at the first stage.
NADIA-JANE BRISTOLL: Because you had your accountant?
You could afford one but not everyone is that lucky.
So, how does it actually work with wage taxes, Ian?
IAN VAN HAAREN: If you have employees in your business...
...then you will have to keep a wage tax administration...
...and you have to withhold wage taxes.
Two things I want to mention about that.
Of course when you own more than 5% of the shares in your company...
...then you also will have to withhold wage taxes...
...if you are working for your own company.
That is the rather important customary wage tax rule.
The other thing I want to mention there is the 30% ruling.
If you have any employees with special skills...
...that come from outside of the Netherlands...
...they can deduct up to 30% of their income to make up for the costs of relocation.
That is generally considered a rather favourable scheme.
NADIA-JANE BRISTOLL: What do you think of that 30% scheme?
AVISHAI TRABELSI: That is one of the most important things for us to come.
It is also for my employees.
Now I have 5 people from Israel, Brazil, America, from different areas.
We all got the 30%, including me.
It is really helping us especially because we are a lean start-up.
So, the salaries are not very high.
So we get more net at the end of the month.
It is super important for us. So, good job there.
[ALL LAUGHING]
NADIA-JANE BRISTOLL: How does it work if you are a sole proprietor.
IAN VAN HAAREN: The one-man business is taxed in income tax...
...as opposed to when you have a company when you deal with corporate income tax.
Generally, depending on your size, usually when you get bigger...
...then you will probably move more to the corporate income tax side.
The one-man business will always be taxed in income tax.
And you will be taxed on your business profits.
That is your income earnings minus any expenses incurred for...
...equipment, travel expenses and the like.
NADIA-JANE BRISTOLL: How does it work in the first year?
IAN VAN HAAREN: That is a good question.
In the first year you cannot file your income tax return digitally.
Usually you file it via the internet.
You get a login code and you can fill in your return.
But in the first year that does not work yet.
We need some extra things from you.
Then you get this paper form, called the M-form.
You can order it via the phone and you need to fill it out.
NADIA-JANE BRISTOLL: It is old-school paper.
IAN VAN HAAREN: It is old-school paper. Exactly.
Another thing that is important in the first year...
...is that you get to choose whether you want to be considered...
...a resident taxpayer for the entire year or not.
That can be advantageous for mortgage interest deduction and other deductions.
So you can take advantage of them for the entire year.
NADIA-JANE BRISTOLL: How was your experience with that?
AVISHAI TRABELSI: Again thanks.
I remember those files but, again, it is not so bad.
It is manually, but it is still reasonably fine.
They need to know us of course and all the history and when we came.
For instance, in Israel we are working together with Germany on tax matters.
So now I need to claim that I moved here.
We are still in the process, but it is okay.
It is not new for the authorities.
It is okay, so no problem.
IAN VAN HAAREN: Nice to hear.
NADIA-JANE BRISTOLL: You told us quite a lot already.
Could you summarise how you calculate the amount of taxes due?
IAN VAN HAAREN: That is a good question.
The income tax is calculated on the business profits earned.
That is just the total turnover minus any costs incurred...
...for equipment, expenses, travel.
NADIA-JANE BRISTOLL: The Netherlands allows entrepreneurs...
...a number of tax deductions such as the entrepreneurs deduction.
How does that work?
IAN VAN HAAREN: If you meet the criteria...
...to be considered a real entrepreneur, you get some rather favourable deductions...
...which can considerably lower the amount of the taxes due at the end.
NADIA-JANE BRISTOLL: How does that work in practice?
IAN VAN HAAREN: The most important criterium is that you are independent...
...and that you run some real entrepreneurial risks...
...that you run the risk that your customer stream will dry up...
...and that you have the risk of non-paying customers.
If you run those risks then you are considered a real entrepreneur.
Then you can apply for these deductions.
NADIA-JANE BRISTOLL: When I qualify as an entrepreneur...
...which benefits can I expect?
IAN VAN HAAREN: If you meet the criteria we discussed...
...firstly there is a 14% profit exemption for small and medium-sized enterprises.
It is called an exemption but you can just deduct 14% of your profits.
Then there is the investment allowance...
...that allows you to deduct up to 28% of your profits for investments you made.
There is also a special investment allowance for environmentally friendly assets...
...such as electric cars.
If you work for at least 1225 hours a year in your business...
...so at least 25 hours a week...
...in that case two extra deductions can be made.
The first is that you can have the self-employment deduction.
That is another big one. It is about € 7200 a year.
And if you just started your company you can deduct up to € 2100.
NADIA-JANE BRISTOLL: That is very good.
Those are very great amounts to be able to deduct.
And when do you actually qualify as an entrepreneur...
...for the value added tax purposes?
IAN VAN HAAREN: Interestingly it is possible...
...that you will not be considered an entrepreneur for income tax purposes...
...but that you will be considered an entrepreneur for VAT purpose.
So, the threshold is much lower for VAT purposes.
NADIA-JANE BRISTOLL: And what is that threshold?
IAN VAN HAAREN: Anywhere you provide...
...any goods or services at a consideration...
...you are considered a VAT entrepreneur and that is rather quickly.
NADIA-JANE BRISTOLL: How does that work in the Netherlands?
IAN VAN HAAREN: The VAT-system is the same...
...as the one which is in place in all other EU-member states.
Basically, if you are an entrepreneur...
...and you provide goods and services at a consideration...
...you should invoice VAT to your customers.
Of course any input VAT...
...so VAT that you pay to other entrepreneurs...
...is deductible as long as it is attributable to taxable output.
NADIA-JANE BRISTOLL: What is the rate in the Netherlands?
IAN VAN HAAREN: We have three rates.
21% is the base rate.
There is a 6% rate for food products, sports services, medicine and books.
There is zero rate for any exports.
So if you export goods you don't have to charge any VAT on the goods...
...but you get to deduct all of the input VAT.
So that is sort of the best of both worlds.
NADIA-JANE BRISTOLL: Perfect. Are there exemptions?
IAN VAN HAAREN: Yes, a number of exemptions apply...
...mostly for services, educational, medical and cultural.
When the service that you provide as an entrepreneur is exempt...
...any input VAT attributable to those goods and services...
...is not deductible.
You can find more information about our tariffs...
...on the website business.gov.nl.
NADIA-JANE BRISTOLL: That is good to know.
And more practical: when and how should you file your VAT-return?
IAN VAN HAAREN: VAT-returns are usually filed every quarter.
There are some exceptions applied but usually it is every quarter.
You file them also digitally via the web site of the tax authorities.
This is quite a simple form that you have to fill out.
NADIA-JANE BRISTOLL: What if you forget or you don't file it or a bit too late?
What happens then?
IAN VAN HAAREN: That is a good question.
The VAT-system is totally automated.
The assessments are handled digitally and are automated.
So if you miss a term or don't file anything...
...the system automatically files any additional assessments but also fines.
So that can be a bit of a problem.
So it is really important that you always file your VAT-return on time...
...and also pay it within the time that is set for it.
NADIA-JANE BRISTOLL: What does that mean for your administration?
What do you need to do?
IAN VAN HAAREN: It is important...
...that any business should have a good financial administration.
Of course you should know if you have any profits or losses.
The same information is also used for the revenue service...
...to base your VAT-return on and also your income tax returns.
AVISHAI TRABELSI: I can give an example.
For instance in Israel I also paid it when I had my own business.
Here it is easier because we are using a software...
...to deduct all the VAT-returns.
We do it month-to-month because for us it is also important...
...to get the cash flow in the same way we are working.
We started quarterly but now that we are growing we made it month-to-month.
It is easier for us to get the VAT-return.
NADIA-JANE BRISTOLL: What are the minimal requirements...
...for a financial administration?
IAN VAN HAAREN: There are no really hard rules...
...for what an administration should contain.
It should be tailored to the business.
Most important is that it is quickly accessible for the tax authorities...
...that it is verifiably correct and that it is kept for a long enough time.
So you have to keep all the documents that are generated within the business...
...digitally or on paper for at least 7 years.
Any documents that pertain to real estate should be kept for at least 10 years.
NADIA-JANE BRISTOLL: My last question is...
...are you obliged to give a receipt to your customers with every transaction?
IAN VAN HAAREN: No. In some EU-countries that is the case...
...but in the Netherlands you don't have to send an invoice every time.
Only to other entrepreneurs you are obliged to have an invoice.
But if your clients are private persons there is no need to invoice.
Of course if you invoice private persons you have to keep it in your administration.
NADIA-JANE BRISTOLL: So that you know you have done it of course.
IAN VAN HAAREN: Yes.
NADIA-JANE BRISTOLL: Thank you very much for this talk.
It is I think very interesting and very helpful for everyone who is watching.
So as an entrepreneur you can benefit from different tax deductions or allowances.
Keep track of your records and your hours right from the start.
That is the only way to benefit from tax schemes.
Seeking professional advice from an accountant is usually a good idea.
[CLOSING TUNE]