The healthcare act contribution: the bill that surprises freelancers

What is the healthcare act contribution?

Everyone in the Netherlands pays for healthcare twice. The first is the premium you transfer to your health insurer yourself, the nominal premium. The second is an income-related contribution. For employees the employer pays that contribution, which is why you never see it as an employee. As an entrepreneur you have no employer, so you pay that contribution yourself on your profit. It isn't a tax but a national insurance contribution, and it's collected through a separate assessment.

How much do you pay?

For entrepreneurs it's just over 5 percent of your profit after the entrepreneur's deductions. There's a ceiling: above a contribution income of around 75,000 euros you pay nothing extra. The percentage and that maximum are set anew each year, so use the current figures for your year. On a profit of 40,000 euros you're looking at roughly 2,000 euros, and that comes on top of your income tax.

One more thing to know: for entrepreneurs this contribution is not deductible from your profit. So you can't claim it as a cost, however businesslike the assessment feels.

When do you get the assessment?

The contribution is determined on the basis of your income tax return and arrives as a separate assessment, usually shortly after or together with your income tax assessment. If you have a provisional income tax assessment, you can also receive a provisional assessment for the healthcare contribution and pay it in instalments. If your profit changes significantly, adjust both provisional assessments; they don't move in step automatically.

How much should you set aside?

Many freelancers set aside a percentage of every invoice for tax, but only reckon with income tax. Add the healthcare contribution and you often end up a few percentage points higher than you thought. If you work with a fixed reservation percentage, it's wise to set that percentage together with your bookkeeper based on your expected profit, rather than using a rule of thumb from the internet.

What's sensible to do?

Assume that two assessments will follow your return and plan accordingly. If you can't pay an assessment in one go, request a payment arrangement in good time rather than waiting for collection measures. We include the healthcare contribution as standard in the calculation we make with your annual figures, so you know what's still coming.