How much money should I set aside for tax?
Short answer
As a freelancer or sole trader, set aside around 30% of your profit for income tax and the Health Insurance Act contribution. Also set aside the VAT you receive, because it isn't yours. A separate savings account and a provisional assessment (voorlopige aanslag) help you avoid a large bill afterwards.
Updated on · Reviewed by the tax advisers at Boekhoudvriend
The right percentage depends on your profit, your deductions and your personal situation. With a low profit, 20% is often enough; with a high profit, it can approach 40%. Better to start generously and adjust once your figures are clear.
A practical approach
- Open a separate savings account for tax
- Each time a customer pays, immediately set aside the VAT and a percentage of your profit
- Request a provisional assessment, so you pay your income tax monthly
- Have your accountant prepare a forecast halfway through the year
VAT is not turnover
The VAT you invoice is paid on to the tax authorities. If you treat that VAT as turnover, you will be short of money at the end of the quarter. An up-to-date dashboard shows how much VAT you owe.
Sources
This answer is general information, not personal advice. Your own situation may work out differently, so feel free to ask our team.