Freelance versus employment

Freelance versus employment is the most frequently asked question. What is possible and what should you do?

Freelance versus employment

The moment you google about this topic in Dutch you find all kind of rules and regulations that basically tell you there is no choice. It is either employment or freelance, not something you can choose between. Is that right?

The issue is about social premiums. The Dutch Government is afraid the base for social premiums will erode when employees in the Netherlands terminate their employment. These former employees return to the same employer, now referred to as client.

This ‘client’ then have them perform the identical job, using the identical facilities. The difference is that the ‘client’ does not pay salary, but an invoice. The invoice is less than salary costs, which makes the ‘client’ happy. The former employee has entrepreneurs credits, hence pays less tax, is freelancer is also happy.

Freelance versus employment


The unhappy party in this deal is the Dutch tax office. Before this paper change the employer was paying social premiums for the employee. Such as unemployment, disability maybe even pension premiums. Now this paper change is active, no such employers costs come on top of the costs of the employee. Only the invoice is to be paid.

The Dutch tax office is fighting this situation. You may find a DHL or PostTNT person at your door fully dressed up in their logo and driving a van with the logo. That is not an employee, but a self-employed person. The nurse visiting clients in your neighborhood with her own car, short term as these clients are at the end of their life span, is an employee. The world upside down.

One client is no client

The moment you have decided to do a freelance job for 1 client, you visit the Chamber of Commerce and they send you away. You are not an entrepreneur, but a deemed employee. But are you?

One client is a client

We have in international situations a view, confirmed by the Dutch tax office, that differs from the Chamber of Commerce. If you have an employer abroad, who is not willing to set up employment in the Netherlands, as they have learned about all the obligations of Dutch employers. Or you found a company that likes you to work for them, but not via employment. Then it is possible.

In the international situation you are not eroding the Dutch social premium base, as there was none to start with. Plus if you do not accept the contract, there is no income. Hence, one client is a client. We will be pleased to assist you.

What should you choose if you have the choice?

If you have the choice between employment and freelance/self-employed, what should you choose? For us without a doubt the employment. Dutch labour law protects your rights under employment. If you are employed you are insured for unemployment and disability. This is often an under estimated factor. The insurance to take out to match what the employer offers you, easily exceeds the EUR 10.000 premium per year. The insurance company will ofcourse try to deny possible claims.

Another aspect that should not be underestimated is the fact of being an entrepreneur. Not being a simple employee. A simple employee performs the job, collects salary. Happy days. The entrepreneur needs to create an invoice inline with invoice requirements. File Value Added Tax returns based on a correct bookkeeping. A bookkeeping that needs to be stored for at least seven years. The income tax return is a more complicated entrepreneurs income tax return. Then still the tax office can perform an audit and disagree with what was filed sofar. Such a correct is often for the past five years.

Tax is exciting

We think tax is exciting. We are excited that you found a foreign company that likes you to work for them. In our opinion it is best to set up a Dutch payroll for that foreign company. If that foreign company is not willing to comply with the Dutch labour law rules, the second best option is contracting. In this setting the contracting is not a problem. We are happy to assist you.

BV company or one man company: what is limited liability?

income tax

A BV company stands for limited liability, one man company implies you are fully liable. What is limited liability?

BV company

A BV company is the Dutch equivalent of the Ltd, the limited liability company. Such a company can only be incorporated by the Dutch notary. The Dutch notary will ask the incorporator about the volume of the share capital. The minimum is EUR 0,01 and there is no maximum.

Honestly, the EUR 0,01 share capital is a bit silly. The balance will show zero, as EUR 0,01 equals zero on the balance. Potential investors or traders might wonder what is the situation. Then the silly one cent is often forgotten to be paid. The limited liability starts after the full share capital has actually been paid into the company bank account.

One man company

The one man company is a transparent company. That implies the company itself cannot own goods or be held accountable. The person owning the company owns the goods and is held accountable. The Dutch Chamber of Commerce ( is the organization incorporating these type of companies.

The Dutch Chamber of Commerce will ask basic questions while the process of registering the one man company is taken place. These questions are to avoid aspects as deemed employment.

BV company or one man company: what is limited liability?

Limited liability what is that?

Limited liability implies the obligations of the BV company shareholder is limited to the capital of the BV company. If a BV company has a EUR 1.000 share capital and the company goes bankrupt, the liability of the shareholder is limited to this EUR 1.000. The EUR 1.000 must have been paid into the business bank account, otherwise the limited liability has not started. The shareholder is then fully liable for the losses and debts due to bankruptcy.

Is the limited liability true?

No, of course not. Life is not this simple. Life is much more complex. A bankruptcy is not happening out of the blue on an early morning. Bankruptcy is a process that starts with no money coming in the BV company. The BV company does have payment obligations like Value Added Tax, Corporate income tax and maybe wage tax.

The standard situation is that money is not coming in, and obligations to pay tax or invoices are not proceeded. That implies there is a little amount of money in the BV bank account. That the shareholder often uses to simply pay the rent or mortgage of his or her house. Or pay for the food on the table. That is how simple life can be.

Personal liability is true

The moment a BV goes bankrupt, the curator, if one is appointed, has only one task: hold personal liable the shareholder. The shareholder might own a house or other assets that could be liquidated to pay for the debts. The curator will simply ask the shareholder to pay back the money he took from the account for the food he or she needs to eat. Nearly never the shareholder is able to pay back the money, and that is the moment the shareholder will be held personally liable and goes bankrupt as well.

If you would investigate the register with the Chamber of Commerce of the bankrupt BV companies and you hold next to that list the moment the shareholder of the BV goes bankrupt. Often the time between the BV bankruptcy and the shareholder bankruptcy is one week.

What is the point of the above?

The point of the above is not to assume that limited liability implies that the liability is limited. It is not. The name of the limited liability company is simple wrongly chosen.

Do you need to be afraid of liability?

Yes and no. You always need to be aware of your obligations. Then again, most entrepreneurs start a company that does not involve heavy machinery, a warehouse, team of employees. Most starting entrepreneurs offer consultancy services. Going bankrupt as consultant is nearly not possible. The investment is basically between your ears, not in financial investments.

If you trade in products, like you sell via an online platform products, you need to be aware of product liability. Even if you are only the company selling the products, not producing the goods, be aware of product liability.

What to do, BV or one man company?

That is a frequently asked question and the answer very much depends on the situation. A simple approach is to start with the one man company. If the company has proven itself with good turnover and opportunities, you can decide or consult about changing that one man company into a BV company. A BV company has many obligations and formalities, so maybe a BV company does not make your life better.

However, if you build value in a company with the intent to sell the entire company to an investor over time. Then it is important to start in a BV company instantly, as a later change will either cost you up front tax. Or a fiscal transfer rule cannot take place by lack of time. In this scenario the BV is the obvious choice. The question then is if you like to have a holding structure or not.

Tax is exciting

We think tax is exciting. We would love to be able to predict the future, but we cannot. Neither can you. We understand you are energetic about your company plans. We invite you to contact us to talk about company setup possibilities. Whether that will be in the end the perfect setup, time will tell. All we know is, get started. Stop planning, simply do it. We will be glad to assist you with the accounting and tax filings in your journey as entrepreneur.

Business bank account – do I need one?

Difference employment versus self-employed: disability insurance

Business bank account, do I need one we are asked a lot. Yes and no, depends on the type of company and on your desires.

One man company or zzp company

A so called one man company or zzp company or freelance company or eenmanszaak is a transparent company. Hence you and your company are one. No so nice in case of a liability claim. With respect to the business bank account it is not required to have one.

Despite what the bank tells you, the Chamber of Commerce tells you or anybody else, you do not require a business bank account. You can use your own personal bank account.

The question is more:

Do you want your private bank account to be used for the business?

We think not.

The advantage of the business bank account is that your can have the account in the name of the company. We think that is professional. Then again, if your personal name is the company name, there is not difference. If the latter is the case, cheapest is to set up another personal account and trade with that.

Another aspect is the accountant. We process your bookkeeping and if we then have to go through your full grocery purchases, holiday spending, rent payments, insurance payments to get to the company details, we spend a lot of time. That time we invoice you. So you are not amused by us charging you more, neither will you not be amused by us  not recognizing some of the insurances to be business insurance, or some of the travel costs not being your holiday.

Finally, we are accountants and have eyes. It has happened that a female former client used her personal bank account so we noticed she purchased condoms, had a wax job, paid for dinner and we noticed something of a hotel. That is for us too much information, as is lingerie or certain toys you purchase for whatever reason.

BV company

A BV company is very much different from the aforementioned one man company. This vehicle is a closed circuit from which payments can be received as salary, dividend or a loan. Using your personal bank account for the business will have serious issues.

The Dutch tax office will take the standpoint that all earnings received in your personal bank account is in fact net salary. A bigger problem we cannot imagine in this situation.

Therefore the BV company needs to have its business bank account. The most important reason is to show the share capital was actually deposited, which activates the limited liability. Why else would you have the BV company.

The bank account itself

The setting up with a bank is a topic for our clients. Our clients do not discuss if they want a business bank account, the issue is, can they have a bank account. If you set up a Dutch BV company with foreign shareholders, there is no Dutch bank that opens a Dutch bank account for you. That is a problem.

Of course we have many clients that were able to set up their Dutch a bank account. We have not yet been able to get our finger behind why some can and some cannot. The policy of the Dutch national bank is not to open a business bank account for a Dutch BV company with foreign shareholders. That said, like some of my favourite clients mentioned: unless your name is Google, Apple or Coca Cola, then of course a business bank account is opened instantly.

The problem with not being able to open the business bank account is the deposit of the share capital. Then again, the rules do not insist on the bank account being a Dutch business bank account. The bank account needs to be owned by and in the name of the BV company. Can be any bank worldwide, that can be used.

Tax is exciting

Tax is exciting, banking is…another trade. A company cannot do without one, or can we? Maybe in the near future the coin platforms develop in an accepted payment method. Just like less than 10 years ago online shopping was regarded dangerous.

Start company: do I need three clients?

Do I need three clients before I can start a company, is an often asked question. Of course not.

Do I need three clients to start a company?

It is of course a perfect start when you have immediately three clients, but this is not a requirement.

The origin of the three clients question

We are asked if you need three clients, because you have heard about that. Maybe you do not fully understand the origin of this question.

We have a social system in the Netherlands that is based on everybody contributing. The more that contribute, the better the system works, as there is more money to spend on social welfare. 

When you are an employee, then your employer contributes to the Dutch Government social premiums for you. That enables you to benefit from the unemployment benefit, disability benefit and other social system related aspects.

When you are not an employee, but you are self-employed, you are not insured for unemployment. Nor are you insured for disability. If you are not insured, you do not need to pay the social contribution, hence you pay less ‘tax’.

Paying less tax triggers in general human beings from becoming creative. So what do they do, they terminate their employment. The next day they return to the same office, same desk. You do the same job, but now they invoice their “employer”.

The employer is happy as the ‘employee’ is no longer protected by labour law. Not sure if the ‘employee’ understood this part as well. And the employer no longer needs to pay social contributions on top of the invoice of the ‘employee’.

The ‘employee’  sends an invoice, claims entrepreneurs deductions and pays much less income tax.

I have to place between brackets the employee and the employer, as basically nothing has changed, even though they think they are more clever than the system. But if you work full time for 1 client and you have employee look alike conditions, then you are an employee. The tax office is keen to gross up the invoice amount including VAT, and charge the employer with wage tax. Plus penalty naturally.

Therefore one client is no client.

Do I need three clients
Do I need three clients

Why is three enough?

It is not said that three is enough, because if you spend 80% of your time on one client and two times 10% on others, where one is affiliated with the 80% client, you still have not proven to be an independent entrepreneur.

Is this about being an independent entrepreneur?

Yes indeed. It is assumed that if you have a number of clients, and for practical reasons the number three is being used, you run true risks. Risks that come with being an entrepreneur. The risk of losing a project, the risk of not being paid. You make investments, you do what an entrepreneur in general is expected to do.

Do I then need three clients?

Of course not. If every starting entrepreneur immediately had three clients, we would have had nearly no entrepreneurs. Often it starts with one client or even no client. It starts with your desire to start your own company, your own business.

The tax office is sharp on the three clients issue, but also gives you a three year holiday to get to the three clients point. The tax office might ring your doorbell to ask about your activities, make sure you do your best to acquire new business and explain that to the tax office.

So you can start your own business with no or one client, but you need to make sure it develops to a business with more clients and enough to support yourself.

What if I start with only 1 client and it will only be 1 client?

Under conditions, this is not a problem. And we know one situation in which you have no issues, and one situation only. It is a common situation.

You moved to the Netherlands and you foreign employer asks you to work from your Dutch home for that company. But the company is afraid to set up a Dutch payroll for the exposure to the Dutch tax office and what that may imply.

You contacted a foreign company to work for them from your Dutch home, but again they do not want to become exposed in the Netherlands.

This fear for the Dutch tax office is strong, especially in the USA. We understand that fear, we try to explain there is no need to have this fear, but not all companies you can convince.

So here you are, you finally have a source of income, you want to pay Dutch tax over the income in line with the tax treaties, but your employer does not want to set up a payroll in the Netherlands, what do you do?

Indeed, you register a company and start invoices the foreign employer for your services. That is the best you can to be able to comply. The tax office can start asking questions, but this solutions was not related at all to reduce your social premiums payment, not at all for getting more tax benefits, it was within limitations the best you could to do comply. That the tax office cannot argue.


We think tax-is-exciting and we are very much aware of the three client rule. We always encourage entrepreneurs to get more clients, as that is also good to be more independent from that one client.

Foreign employers we try to facilitate the best to our ability with a Dutch payroll, but some foreign employers we cannot convince that they are not more exposed in the Netherlands than the payroll for their employee. In those situations we will be glad to support the ‘employee’ with the one man company with the one foreign client, to make the Dutch tax contributions.

Sorry for the dashes in the middle of the word tax-is-exciting. Apparently Google has a dirty mind and sees only a three letter word that we refer to when we practice to reproduce ourselves. Anything related to that word is spam, hence this devout solution.