Should I register EMZ (ZZP) for small earnings?
10.05.2023What is “small income”?
In the Netherlands, amounts up to 15-16 thousand euros per year are considered small earnings.
Is it obligatory to register an individual entrepreneur if you work for yourself?
No, the law does not require this - the main thing is that you pay taxes on all your earnings. Concealing income leads to very serious fines.
Why then register a business at all?
There are two main reasons:
- Official registration of a business, subject to a number of conditions, allows you to receive benefits that significantly reduce the amount of tax.
- Many organizations refuse the services of unregistered entrepreneurs, since such people do not have the right to issue invoices. For such payments, you have to submit an additional report “Payments to Individuals” to the tax office, which requires you to indicate the personal information of the payee.
How to show income if you work for yourself?
If you have not registered a business, the money earned is indicated in Box 1 of the individual’s tax return in the column “Income from other work.”
If you have registered ZZP or EMZ, there will be an additional business section on your private tax return.
What tax benefits does an entrepreneur receive?
If certain requirements are met, the entrepreneur is entitled to the following tax benefits:
Zelfstandigenaftrek — deduction for the self-employed (private entrepreneur). In 2024, the maximum zelfstandigenaftrek is 3750 euros. The specific amount of the deduction is no more than 36,97% of business income. If your earnings are too low to receive the maximum zelfstandigenaftrek, then you can realize the unused difference over the next 9 years.
To receive the self-employed deduction, an entrepreneur must fulfill the hourly criterion - spend at least 1225 hours per year on business activities. The entrepreneur conducts the hourly administration himself, in a free form. It must be submitted to the tax office.
Important! If you are officially employed full-time, you will not be able to meet the hourly criterion. In the Netherlands, it is believed that a person should rest, so hourly administration will not be accepted from employees, and you will not receive zelfstandigenaftrek.
Starter's allowance — entrepreneur’s starting deduction. Applies only to new entrepreneurs: to qualify for starter saftrek, you must not have registered a business within the previous 5 years. In 2024, the maximum starting deduction for an entrepreneur is 2123 euros.
Mkb-winstvrijstelling — exemption of small and medium-sized enterprises from income tax. In 2024, the benefit is 13,31% of the profit remaining after deducting the entrepreneur.
Source.
Depending on the specific circumstances, entrepreneurs can count on other tax benefits, for example, a deduction for working parents of children under 12 years of age.
So: Our company’s experience suggests that with annual earnings of up to 8 thousand euros, there is no need to register a business. But if you earn more than 15 thousand euros per year, you must register EMZ! Between these incomes, you can decide for yourself.
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