To determine whether you are an entrepreneur for the Tax Administration, it is important to first determine whether you have a business. For the Chamber of Commerce (KVK), a business must meet three criteria: you offer a service or product, you charge a commercial rate, and you work with clients beyond just friends or family. Have you answered all three questions with a ‘yes’? Then you have a business in the eyes of the Tax Administration!
Next, it is good to know that there are two types of tax systems for entrepreneurs: VAT (turnover tax) and income tax. Each has its own criteria for what counts as ‘entrepreneurship’. Let’s start with the criteria for the VAT return. Fortunately, these are quite straightforward.
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You usually need to file a VAT return if you’re self-employed and you receive regular income for this. This is assessed when you register with the Chamber of Commerce. If you’re not registered yet but still meet the conditions, you may still need to apply for a VAT number. There are some exceptions, about which you can read in this blog.
Being an entrepreneur for VAT does not automatically mean you are an entrepreneur for income tax, as explained in the following guidelines.
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Things are slightly different for income tax. The annual income tax return is filed at the beginning of the following financial year. The Dutch Tax Authority then assesses on a case-by-case basis whether someone can reasonably be considered an entrepreneur for the income tax. This can sometimes be difficult to determine. In any case, the Tax Authority looks at the following criteria:
As you can see, the above criteria are not always clearly defined. This means that you, as an entrepreneur, you need to actively assess your own situation. It can also matter whether you present yourself externally, for example through marketing, a website, or a portfolio. You can use the Check for Entrepreneurs (in Dutch) to assess your personal situation. Please note that the Tax Authority can always make a different assessment once they have reviewed your tax return, and you may then be required to file either a business (profit) tax return or a personal tax return.
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Suppose you are not considered an entrepreneur by the Tax Authority, but you still earn income from your business or a single freelance assignment. This income must still be declared, as everyone, whether an entrepreneur or not, is required to file all their income in the income tax return. In a personal tax return, this is done under ‘Result from other activities’ (ROW).
You may deduct any costs you have incurred to realize this income, but you cannot claim the entrepreneur allowance or the SME profit exemption. This is the main difference between filing a tax return as an entrepreneur or as a private individual. The difference in tax burden can be significant, as shown in the following example:
In 2026, the private business ownership allowance is €1,200. The SME profit exemption is 12.7% of your profit after deducting the entrepreneur allowance.
Suppose you are an entrepreneur for income tax and have a profit of €50,000. If we deduct the private business ownership allowance, you have a profit of €48,800. After applying the SME profit exemption, a taxable profit of approximately €42,600 applies.
If the same profit of €50,000 has to be declared as “result from other activities”, the taxable profit is almost €7,400 higher.
Important to know: if you are an entrepreneur for income tax, the SME profit exemption always applies, but the entrepreneur allowance does not necessarily. To qualify for certain tax benefits, you must also meet the hours criterion of 1,225 hours. This means that you spend three to four days a week on your business. Besides the private business ownership allowance, there is also the tax-deductible allowance for new entrepreneurs (startersaftrek) of €2,123, which applies if you are in the first five years of your entrepreneurship and you meet the hours criterion.
In addition, there is also the small projects investment credit (KIA), which reduces your taxable profit by 28% of the investment amount if that amount is between €2,901 and €71,683 in a year.
As you can see, it can make a huge difference whether you file a return as an entrepreneur or not, and whether you meet the hours criterion!
Want to know everything about tax deductions for entrepreneurs? Read our blog about all the different deductions for a full overview!
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You can be an entrepreneur and work in salaried employment at the same time. Whether you also meet the hours criterion alongside your salaried job is a different question: if you have a 40-hour contract, it is unlikely that the Tax Authority will consider it realistic that you also spend three days per week on your business. In this case in particular, make sure to keep accurate time records.
Do you only have one client? This is not automatically a problem, but it can raise questions about whether you are truly independent. In some cases, this may be seen as a sign of false self-employment, What matters is whether you meet the other criteria, such as being able to determine your own hours, rates, and how you carry out the work.
Sometimes the difference between a hobby or a business is small. Do you structurally make a loss with your activities? Then this will probably not be seen as a business. But if you are still in the start-up phase and there is a profit perspective, you may still be seen as an entrepreneur for income tax. A bookkeeper can help you make this assessment.
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You usually need to file a VAT return if you’re self-employed and you receive regular income for this.
The Dutch Tax Administration assesses on a case-by-case basis whether someone can reasonably be considered an entrepreneur for the income tax.
This income must still be declared, as everyone, whether an entrepreneur or not, is required to file all their income in the income tax return. In a personal tax return, this is done under ‘Result from other activities’ (ROW).
Schedule a no-obligation, digital introductory meeting with us.
