Starting

When you start a business you must first register with the Chamber of Commerce. The Chamber of Commerce ensures that you are registered with the Tax Authorities. 

The Chamber of Commerce assesses which taxes you are liable for as an entrepreneur. 

If you start a sole proprietorship, a general partnership, a husband and wife partnership, a corporation or a limited partnership, you will at least be liable for income tax. Oftentimes you are also liable for VAT.  

You will be assigned a VAT number by the Tax Authorities when the Chamber of Commerce has passed this information on to the Tax Authorities. 

If you hire employees, but also as a director-major shareholder, you are also responsible for withholding the wage taxes.  

If you set up a private company, your company will owe corporation tax, revenue tax and payroll tax. 

Administrative obligations 

As soon as you start a sole proprietorship, a general partnership, a corporation, a limited partnership or a limited liability company you already have to meet administrative obligations.  

Accounting records must be kept. The accounting is not only important for filing the tax returns, but also serves as evidence. For small business owners, there are a number of exemptions in the administration. 

Different rulings and possibilities 

Self-employed persons deduction and starter’s deduction. 

Research and development; if in a given year you spent more than 500 hours on research and development, you are entitled to the deduction for research and development.  

Co-working deduction; you are eligible for the co-working tax deduction if your partner has helped you in the business. 

VAT

For the purposes of VAT payments, you are an entrepreneur if you are an independent business or professional. There is one general rate of 21% for VAT. The 21% rate is applied to all services and goods not covered by an exception. There are two exceptions to the general rate. 

The first exception is the 9% rate. This rate applies to certain goods and services (food, drink, campgrounds, sports clubs, etc.). 

The second exception is the 0% rate. This rate applies when you supply goods and services to a foreign entrepreneur. The 0% rate should not be confused with the exemptions for VAT. If a service or good is exempt, you are not entitled to pre-deduction. If the 0% rate is applied, you are entitled to pre-deduction. Pre-deduction means that you are entitled to deduct the VAT paid by you.  

The small business scheme (KOR) is an exemption from VAT. This means that you do not have to pay or can receive back any VAT.  

Corporate tax

If you have established a private company, the company is liable for corporate tax. The tax will be levied on the profit. 

Wage tax

If you hire staff as a private company or self-employed entrepreneur, you become responsible for withholding taxes on wages. The party with the obligation to withhold taxes is required to withhold these from the employee’s income. If you have hired an employee, you must report this to the Tax Authorities.  

If you have a private company, then the employment income of the director-major shareholder falls under the payroll tax. The private company is then responsible to withhold the taxes. This means that the private company is required to withhold wage tax from the earnings. 

Tax advisor

In order to avoid missing out on benefits, but also to ensure meeting the established rules and regulations, it is a good idea to hire an (international) tax advisor. This will take a lot of work off your hands and will save you a lot of time and therefore perhaps even entail extra benefits.