My spouse and I are close to starting our own business under the Dutch American Friendship treaty. I am going to come up with an approximate scenario of numbers. Can somebody please give me a ballpark idea of what I will pay the government at tax time? Assume that we gross 3500 euro a month from our business. This is just a straight transactions between myself and the client. I am married. But I have no dependants, No mortgage, No stocks or investments. No other income whatsoever. And no employees working for us. So at the end of the year we gross 42,000 euro. Based on what I just explained, can somebody please tell me approximately what we will have to pay the DUTCH GOVERNMENT at tax time? From what I gather, we will be having to pay the Dutch Government 50% of this. Meaning that we will be sending them 21,000 euro at tax time. Am I correct or wrong? And will we get any of that back? And if so ,how much? Any help is appreciated. Thanks.

It is not that bad. You don't have to pay 50% of your income to the tax office, although tax rates are high.

There are tax brackets, the higher the income the higher the tax rate. But it goes up in steps. See www.expatax.nl/tax_rates.htm for example. After you have calculated the tax you can reduce it with certain tax credits.

If you spend more than 1,225 hours on your business in a year you can claim a self employed deduction, in the first 3 years a starters deduction and also an exemption for small businesses. This will certainly reduce the tax you have to pay. If you have a partnership and you both work 1,225 hours than both partners can claim the self employed deductions.

You can also deduct the business expenses like telephone, internet, equipment, advertising, travel, registrations, advice etc.

Administration will take some work but it can certainly lead to a tax benefit.