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How much should you set aside for tax?
Written by Ilias3 min read
As an employee your tax is deducted automatically, but as a self-employed person you have to arrange that yourself. At the end of the year you get an assessment, and the money has to be there. Many starting entrepreneurs get into trouble because of this. This article explains how much you sensibly set aside.
Why do you have to reserve yourself?
On your profit you pay income tax, but that's not deducted automatically as with a salary. You receive your turnover in full and have to keep the tax part aside yourself. If you don't, you face an unpleasant surprise at the assessment.
What rule of thumb can you use?
A commonly used rule of thumb is to set aside about 30 to 40% of your profit for income tax. The exact percentage depends on your profit, your deductions and your personal situation. If you earn more, you fall into a higher bracket and so set aside relatively more. For a good estimate you can use last year's assessment as a guideline.
Don't forget the VAT
Besides income tax you must also keep the received VAT aside. That VAT isn't yours; you collect it for the tax authorities and remit it quarterly. So put the VAT you receive on invoices straight into a separate account, so you don't accidentally spend it.
How do you handle this practically?
The handiest approach is a separate savings account where with every payment you immediately move your tax and VAT portion. That way your main account only shows the money that's really yours. Requesting a provisional assessment can also help, because you then pay in instalments instead of all at once.
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
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