Freelancing as a couple in the Netherlands : maximizing the effectivity of your 30% ruling
Mar 20, 2024
Lots of freelancers, private contractors, digital nomads and other small business owners flock to the Netherlands to work from here. Some choose to come alone, others are joined by their partners, spouses or children. Sometimes a couple consists of two freelancing individuals, and in those cases it may be worthwhile to work together from the same Dutch freelancing entity. In this article we will be diving into that particular situation.
Setting up your freelancing entity in the Netherlands
The Netherlands basically has 2 company types you can choose from as a freelancer: the ZZP/eenmanszaak and the BV. You can find a lot of information about the BV versus the ZZP company form online. But as an incoming digital nomad, your first order of business is not the company form itself but checking whether you are able to obtain the holy grail: the 30% ruling. Originally intended for attracting highly skilled (and highly paid) employees, it is now extensively used by incoming freelancers as well. The 30% ruling gives you a 30% tax break on your income, and a lot of other nice benefits.
The main requirements for the 30% ruling are currently (2024):
(1) You must earn at least € 46,107 per year (a lower threshold applies to under-30s). It is advisable to have a salary of at least € 66,000 per year;
(2) You must work from a Dutch BV (not a ZZP) and be hired from abroad as its director;
(3) You may not have lived within 150 km of the Dutch border for more than eight months out of the last 24 months prior to the start of self-employment in the Netherlands.
So if you want to go for the 30% ruling, you are required to work from a BV. So what it’s really about, is choosing between the ZZP/eenmanszaak or the BV+30%. And that one boils down to the question: are you able to earn at least € 66,000 per year (per person) in the Netherlands? That solves the question of choosing between company forms for you then.
Setting up your freelancing business tax efficiently
If you are moving to the Netherlands and expecting to earn € 66,000 per year, the choice for the BV+30% is an obvious one. Let’s take a look at what you would be paying in taxes with €66,000 per year in earnings in a BV+30% ruling (during the first 20 months, for now at least):
Figure 1: € 66,000 profits per year in a BV+30% yields € 53,533 post tax salary. DGA salary calculator: Knab.nl
That’s € 53,533 net over € 66,000, which makes for an effective tax rate of 18,89 %. As the income increases, the taxation increases as well of course. This is because a higher proportion of the income starts to fall into the highest tax bracket (49,5% on income above € 75.518, 36,97% on income below that (2024)).
So we now discussed the taxation over one income, of which a sizable portion falls into the highest tax bracket. Many digital nomad spouses and partners choose to work together from one BV and then split the profits earned between them. This way you can split one € 132,000 freelancing profit into two € 66,000 incomes, meaning the two incomes will both separately not fall into the highest tax bracket. They are twice treated in accordance with figure 1 above, instead of once in accordance with figure 2. That's a difference of more than € 13,000 post tax salary!
Figure 2: € 132,000 profits per year in a BV+30% yields € 94,034 post tax salary. DGA salary calculator: Knab.nl
The BV+30% ruling gives you many other benefits:
Partial non-resident tax status for Dutch Box 2 and Box 3 taxation. This means that any foreign savings, stocks, crypto, real estate and other assets are kept out of your Dutch income tax returns.
Relocation cost expensing in your Dutch BV. As a prospective employee of your new Dutch BV, you need to be relocated to the Netherlands. These relocation costs there are necessary for the business. You can therefore pay them out of the company’s revenues and deduct them there, instead of out of your private pocket. The costs covered here include: the costs for relocating your household goods, plane tickets for yourself and your direct family members.
Additional generic relocation cost expensing of € 7,750. That’s right, on top of the actual relocation costs you can expense an additional € 7,750 as “generic relocation expenses” in your Dutch BV company (2023).
If you bring children along with you, you can expense the expat schooling costs for each child as a business expense in the Dutch BV. Just make sure the school is an international or expat school, not a regular school.
Free driver’s licence swap. Holders of the 30% ruling are also allowed to swap their foreign driver’s licence for a Dutch driver’s licence. You need to wait until the final verdict of your 30% ruling though. Just make an appointment at your Dutch “gemeente”, present your 30% ruling and your foreign driver’s licence, and all will be arranged.
Limitation of liability. Oft overlooked, but working as a freelancer can in some cases lead to damages and liabilities. For example when you are doing consulting work and your advice was a bit off the mark. Any damages resulting from your work stop at the Dutch BV’s doorstep, because it has limitation of liability. That means you can never be held liable in private, so you keep your personal assets safe. Below you will find all benefits of the BV+30% when compared to the ZZP/Eenmanszaak.
Figure 3: The pro's and cons of the ZZP/Eenmanszaak and the BV+30%.
Disclaimer
The numbers in this article are illustrations in accordance with the tax rules and rates effective as of March 2024, and should not be treated as tailored personal tax advice. They are indications as to what you can expect in terms of taxation in the Netherlands. Under no circumstance are you allowed to receive a salary with no labor performed in return, but as entrepreneurs you are free to distribute salary between directors as you please.
The 30% ruling has undergone a major overhaul in 2024. This in effect means the 30% ruling only applies for 20 months, after which it diminishes with 10% after each subsequent period of 20 months. A different calculation must therefore be made after each 20-month period expires. It is widely believed, however, that in 2025 the 30% ruling amendments of 2024 will be reversed due to severe backlash from big Dutch corporations who rely on the 30% ruling for attracting foreign talent.
