Income tax in a nutshell

Earlier, we discussed VAT return for entrepreneurs. Income tax is a form of tax that self-employed people, such as freelancers, sole traders and partnerships, pay on business profits. In most cases, as an entrepreneur, you pay this once a year.

Who has to pay income tax?

Everyone who lives or works in the Netherlands and thereby receives income must income tax pay. This therefore applies not only to salaried employees, but also to the self-employed and entrepreneurs. In addition, income tax also applies to people who do not live in the Netherlands but who have income from Dutch sources, such as rental income from a property in the Netherlands.

File a tax return as an entrepreneur

As an entrepreneur, you are obliged to file an income tax return with the tax authorities. The tax return for entrepreneurs differs in a number of ways from the return for individuals. For example, as an entrepreneur, you must enter your full profit in box 1 of the declaration. This is different from private individuals, who only pay tax on their income in box 1, such as wages and pensions.

Preliminary attack

As an entrepreneur, it can be difficult to determine in advance how much income tax you have to pay. That is why you can request a preliminary assessment. This means that you already pay part of the income tax during the year. This can be nice if you have a lot of administration to keep track of.

At the end of the year, it will be finally determined how much income tax you have to pay and the overpayment will be refunded to your account or you will have to pay extra.

Deductions

You may be entitled to various deductions, such as the self-employed deduction and the SME profit exemption. These deductions reduce the amount on which you have to pay income tax. The self-employed deduction is a fixed amount that can be deducted from the profit. The SME profit exemption is a percentage of the profit that can be deducted from the profit. Please note: However, you must meet a number of conditions to be entitled to these deductions.

Did you know that, as a sole trader, you can deduct the interest and closing costs of your business loan from income tax?

VAT and income tax

As an entrepreneur, you also have to pay VAT on the products or services you sell. However, VAT is not seen as part of your profit on which you have to pay income tax. You must declare the VAT separately and pay it to the tax authorities. Now that you know more about income tax.

Are you going to make use of the option to deduct interest and closing costs from income tax. So what leaves you with more at the bottom of the line? At Swishfund, you can take out a business loan easily and quickly. Curious about the possibilities? Check out the business loan for the options or apply for your loan directly below.

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