5 mistakes when doing bookkeeping as a freelancer in the Netherlands

The Netherlands has a high rate of freelancers and self-employed workers. According to the Netherlands Chamber of Commerce (KvK), more than 1,1 million workers (about 17% of the population) are full-time self-employed in the Netherlands. Despite the growing popularity of self-employment, many find it difficult to deal with their finances. Keeping track of finances as a freelancer in the Netherlands doesn't have to be difficult. Below, we have listed the 5 most common mistakes that are made during bookkeeping in the Netherlands. By avoiding these mistakes you will save a lot of time, money and your business can grow even further.

On this page:

1. You use the wrong VAT-rates
2. Not using VAT deductions
3. Managing finances in Excel
4: VAT refund from a business dinner
5: Starting your VAT return last minute

1. You use the wrong VAT-rates

A common accounting mistake is using the wrong VAT rates. For example, a low % rate is charged, while a higher rate should be stated on the invoice. Depending on your business, you might be dealing with different products or services that differ in VAT rates.

When creating an invoice for your clients, it is important that you enter the correct VAT rate for each specific type of item or service. Levying an incorrect VAT amount can be fined by the tax authorities, so be careful about this. In addition, you may have to deal with the reverse-charging VAT, especially when you do business abroad. We advise you to outsource your bookkeeping, so that you can be sure that the bookkeeping is done right and accurate.

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2. Not using VAT deductions

Many freelancers lose a lot of money because they don't know which deductions they qualify for. As a freelancer, you can make use of a number of additional VAT deductions, on top of the general VAT deductions.

The most common VAT deductions for freelancers in the Netherlands are:

Zelfstandigenaftrek (Self-employed deduction)
Startersaftrek (Starter's deduction)
Investeringsaftrek (Investment deduction)

Please note: this is not tax advice. Always consult the advice of a professional bookkeeper or accountant to check which rates and conditions apply to your situation.

3. Managing finances in Excel

By definition, you are not doing anything wrong by using excel for your accounting. However, keeping managing your finances in Excel has numerous disadvantages. When you book in Excel, you cannot link your bank account. Also, Excel cannot be linked to, for example, the tax authorities.

The thing that is perhaps the most disadvantageous about Excel, is that it is often unclear. When the tax authorities come to check, it must be possible to do this within a reasonable period of time, with Excel this is often impossible. If an error is discovered during an inspection, this can cost you a lot of money due to fines from the tax authorities. We therefore advise you to use online bookkeeping programs, such as E-boekhouden or Moneybird.

4: VAT refund from a business dinner

It is something that a lot of entrepreneurs still do: recover the VAT from a business lunch or dinner. However, this is not allowed by the Dutch tax authorities. VAT may not be deducted if the food and drinks are consumed in a catering facility or if it is provided by a caterer.

Another mistake that entrepreneurs frequently make is that they throw away the receipt for the business dinner. Allthough the VAT may not be deducted, the receipt with the costs does belong in the financial administration of your business.

5: Starting your VAT return last minute

Many entrepreneurs are very reluctant to file a VAT return every quarter. Some do it themselves and some have to collect all the documents around in time and send them to their accountant. It costs a lot of time to collect all your administration from the last 3 months. This makes it very tempting to postpone this until the last moment. Do NOT do this! Sometimes you find out at the last moment that certain documents are missing, and you need time to find them. If your VAT return is incorrect or if it arrives too late at the tax authorities, you can receive a fine. This might cause a lot of unnecessary stress for you as a freelancer.

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Need help managing your finances in the Netherlands?

Good financial planning is crucial for every entrepreneur. Are you planning to start a business in the Netherlands? Then it would be smart to talk to an advisor and make a (financial) plan together. The bookkeepers in our network are happy to help you! Request up to three quotes free of charge and without obligation from different English-speaking bookkeepers in your area. Fill out the form below.