What is the Healthcare Insurance Premium (ZvW)?
If you’ve filed your income tax return as an entrepreneur before, you will undoubtedly have come across the term Healthcare Insurance Premium, or ZvW in Dutch. Every year, you pay your ZvW contribution to the Dutch Tax and Customs Administration, in addition to your income tax. But what exactly is this premium and why do you pay it?
The Healthcare Insurance Act
Every year, the Dutch government sets a budget for the total healthcare in the Netherlands. This budget determines how much money is needed to provide everyone in the country with the necessary medical care. In order to be able to pay for all this, the Healthcare Insurance Act was introduced in 2006. This act is to ensure that healthcare remains of good quality and affordable for all. Everyone in the Netherlands who receives an income has to contribute to it. This is done in the form of the monthly premium you pay to your health insurer of choice, and by paying a Healthcare Insurance Premium.
Amount of contribution depends on income
How much your contribution to the ZvW is depends on your income. As an entrepreneur, you pay a contribution based on your profit. If you work under an employment contract, your employer is responsible for paying the Healthcare Insurance Premium. So as an employee, you don’t have to take this contribution into account. But as a self-employed professional it’s wise to set aside part of your profit for this. For 2021, the amount you’ll need to pay is 5.75% of your income; in 2022 this will be lowered to 5.45%.
As said, it can be smart to set aside money to pay the ZvW contribution. Start your year by making an estimation of your profit and use this to calculate your contribution. However, the ZvW premium is capped at a certain income. In 2021, the maximum contribution was limited to €58,311. No contribution needs to be paid over the amount that exceeds this limit. This means that you pay a maximum Healthcare Insurance Premium of €3,353 over 2021. Are you also working as an employee under contract? In that case, your employer will pay part of the contribution over your salary and you only pay a contribution over your profit as an entrepreneur up to the maximum income-dependent contribution.
Paying based on estimate
You can also opt to pay your ZvW contribution in advance at the beginning of the year, with the amount payable based on an estimate of your profit. To do so, you have to request a provisional assessment from the Dutch Tax and Customs Administration. You can pay the premium in one go or in monthly installments. After submitting your annual income tax return, you’ll know if you’ve paid too much or too little ZvW and the difference will be settled.