r/eupersonalfinance • u/unknownstudentoflife • 4d ago
Taxes First time earning serious money. Need advice on how to handle it/ set up my taxes.
Hi there, pretty new to handling my finance's so would appreciate the help.
i'm 24, been running a contracting business as a self employed contractor in ai. Tax residence in the netherlands.
I recently landed a pretty big client in the us. Have been working with them for the last 2 months. Now close to signing a proper agreement for a long duration.
They essentially offered me either to stay self employed or to become an employee, whatever suits best tax/ financial wise since i'm doing independent research work for them.
Now it got me wondering, how to setup taxes and my finances, it's the first time i'm earning serious money ( base is anywhere between 150/200k without bonuses included based on objectives i'm working on. )
I currently still have other clients lined up, but these would be less and anywhere between 10 to 60k a year depending on objectives.
My questions:
- Do i remain self employed/ change how I'm incorporated in the netherlands or take employee status.
- how to reduce the insane taxes i would have to pay in the netherlands + where to find a tax advisor thats really good, offers great rates and is someone you can trust.
- should i move out of the netherlands and to where? ( been thinking about this one since Portugal seems nice, and the tax in the Netherlands is ridiculous at my current rates )
Thanks a lot!
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u/krizz_yo 4d ago
i think in europe, it's between Estonia, Malta and Cyprus
Estonia has the good thing of being able to take out money at the end of the year with a 22% flat tax as dividends
Cyprus is the place where a few high earning friends moved to, and they pay very little in terms of Tax
In Malta you can probably structure your business in a way to lower your total taxable income to a minimum, also when I lived there in 2019-2023 there was no income tax on selling stocks, dividends and whatnot, unless they were originating from Malta (so you were safe with foreign exchanges)
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u/sitilge 4d ago
We have 20% in Latvia!
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u/Traditional_Worry307 4d ago
I thought they increased to 25 in Latvia now? Or there is some limit to how much you can take out in dividends?
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u/sitilge 4d ago
No, it's always been 20% AFAIK.
People confuse them (20% vs 25%) all the time because they calculate how much they WANT instead of how much they HAVE. So when you have 1000 EUR: 800 EUR is for you to HAVE, 200 EUR is dividend tax, which is what I meant, the 20%. Now if you decide that you WANT 1000 EUR, it means you have to pay 250 EUR as dividend tax, so then 1250 EUR is what you HAVE and that 250 EUR is 20% of 1250 EUR or 25% from what you WANT to have. Same thing mathematically, just different perspective.
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u/Traditional_Worry307 4d ago
Aah. Yep, they present the same idea in 2 ways lol. Thanks for the clarification
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u/unknownstudentoflife 4d ago
Thanks thats really insightful, do you by chance know for malta if you got to stay there for a certain period of time to qualify for tax residency?
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u/Deldupont 4d ago
DM me, I worked with an accounting firm in Malta and still have contacts that can help you.
Source: I'm Maltese and an accountant.
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u/SegFaultAtLine1 4d ago edited 4d ago
- Move to Poland.
- Become a sole proprietorship (JDG).
- As IT person you can pay 12% tax on revenue(yes, revenue not income, but IT has low enough qualified costs that it doesn't matter) and around 3k PLN/month in social security, retirement and healthcare payments. There's technically a 5% flat rate for R&D(+4.5% Healthcare tax) but you'd need a specialized tax advisor for this.
- Profit.
Note: if you pay the minimum required retirement contribution, you'll most likely get barely anything from the first/second pillar, so self-employed people in Poland should be investing for retirement on their own.
Edit: I just realized that your revenue may be high enough that you might exceed the upper limit for this 12% tax if they change it next year (limit will probably go down from 2 mil EUR to 250k).
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u/jjp3 4d ago
What is your overall tax rate in the Netherlands, out of curiosity? Wondering if it's much worse than Germany. Seems to land around 43% here after social contributions and after taking advantage of deductions, on a high income.
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u/unknownstudentoflife 4d ago
i think personal tax is up to 35% at 38k or less a year, 37% up to 78k a year and 49,5% above 78k. Deductions not included. So only the money you earn above 78k is 49,5% taxed. But not that many deductions are left and unrealized gains is going to get taxed pretty heavy in 2028 here
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u/DazingF1 4d ago
Keep in mind that the deductions benefit the lowest brackets the most, meaning the marginal tax rate of someone earning 40k is only like 10% but that tapering off means it's actually above 60% in the highest tax bracket until a certain income.
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u/SnoooCookies 4d ago
Think you need to take a step back ..
- So the US company wants to hire you payroll or self employed, it implies a full time position
- You have other clients lined up for 10-60k a year
=> you’re planning to work more than 40h a week?
So to start you need to decide payroll or freelancer but by the looks of it entrepreneurship seems a viable option.
Now if you’d be going to entrepreneurship you’d be building a business, how do you see that?
If the business incorporates in NL , or Malta, how are you gonna hire people?
Where do you see yourself live?
…
It seems you have a lot of potential but also some very big decisions.
Optimising for taxes is great once you have the money but what’s the potential in growth?
I imagine if you’d go for the entrepreneurship route and look to scale then you need people. My experience is to build culture you need in-office hours. Talent pool in Amsterdam is far better than Malta.
Especially with younger people you want to have everyone in the same room often. Fully remote is really difficult and works better with more experienced people or atleast that’s my experience.
I do am curious to know more about your business, I’m also building in AI but more on the consulting side. Also looked into digital nomad and tax evasions etc that’s why I’m sharing the above I’m 2 years ahead in thinking, doesn’t mean I’m right but those were my personal decisions.
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u/derping1234 4d ago
If you can remain self employed that is probably worth it. Would being employed by them directly come with any non-compete clauses? Would they even know how to set up your employment to ensure all social contributions etc are paid?
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u/unknownstudentoflife 4d ago
Yess you got 3rd parties like deel that handle payroll overseas in case i would be an employee. Since i do research i have authorship and ownership over my research direction. So the non compete clauses are a bit different but its great you mention it since it might violate some things if not written down 🙏🏼
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u/Recent_Maize5108 3d ago
When moving out, don't forget Bulgaria (EU, 10% corporate tax) and Andorra (non-EU, 0% corporate tax).
Andorra is tricky to get into right now and cost of living (rent especially) are not exactly low, but it's well worth it long term. Bulgaria is easy entry, as an EU citizen you just show up.
I've been in discussions with specialized consultants in both countries and ultimately settled on Bulgaria since my horizon is only 2-3 years (exit driven investor), but I'd suggest to chat with both:
Andorra: giraffe.ad
Bulgaria: nomadtax.bg
Both very professional and knowledgeable (ignore the consulting fees on the website, they only mention those to deter unserious freebie hunters, neither asked me to pay for anything).
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u/ziogio998 4d ago
The best country in the EU to be self employed is the Czech Republic. Taxes are absurdly fair, you're going to pay 25% or so TOTAL on that income (social + health + income tax), no wealth tax, capital gain tax 0% if you hold for 3y, so on so forth. Great city, great services, very safe. Nowhere near as good if you're an employee, NL is actually not that bad for employees.
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u/lingzilla 3d ago
Do be aware that a bunch of different countries do not regard you as a legitimately self-employed if you only have a single client that you work for.
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u/Ok_Atmosphere_3782 1d ago
I think he means he’s been an ai trainer and does t know how to file taxes
https://giphy.com/gifs/xT1R9XjxkgsaIQClDG
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u/Replika90 4d ago
Ask AI?
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u/unknownstudentoflife 4d ago
I rather get the opinion of someone who has living experience
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u/Replika90 4d ago
That's all of us - but you ask some pretty specific questions. I'd not disregard AI so quickly. Surely you know your prompts as an contractor in AI.
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u/unknownstudentoflife 4d ago
Oh no i think asking ai is completely viable here to ask advice to. But i rather want to ask people on here who kinda have lived through it or understand it from personal experience's since ai's advice looks great on paper but is often not based on people their actual experience with it
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u/maggieyw 4d ago
No actually AI is much better than all the answers here which are at best half way
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u/Sevenths0n 4d ago
No? Talk to someone professional about it? AI will most likely combine search results along with some generic laws of the given country (often timea outdated) and then it will apologise for the trouble it caused
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u/Yteburk 4d ago
Ah yeah grow up in The Netherlands, make use of all the resources that are offered, then leave for your own benefit.
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u/Own-Trade-2243 4d ago
stay with us bro, someone has to support the social housing for the Moroccans!
He should get out of the Netherlands as soon as possible - 50% income tax above 70k is outrageous
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u/Yteburk 3d ago
Haha, you think that’s the problem? Jesus christ
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u/Own-Trade-2243 3d ago
Google show me the net fiscal impact of immigrants in the Netherlands study
Then stfu, dork
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u/Yteburk 3d ago
Ah so because you are born here your life is worth more?
I am 25 years old, with a double bachelor and master’s degree. All these 25 years I have been living on handouts from the government as well. If I leave now after the community has invested so much, that would be so egotistical.
Just like with insurance, you have good risks and bad risks. It’s not decided beforehand. If we only allowed people that are net benefitors, it would be a race to the bottom. That is called solidarity.
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u/Own-Trade-2243 3d ago
It’s worth more because you’re contributing more, without people being net positive there would be no society.
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u/Yteburk 3d ago
Would you be willing to listen to this?
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u/Own-Trade-2243 3d ago
Pointless if you cannot explain how society will function if majority is net negative fiscally.
You’re really arguing people making us lose 100-600k EUR over their lifetime are as valuable members of the society as everyone else, lol
inb4 “corporations will pay” - where will they get the money from if people who are net negative have low spending power
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u/New_Interaction_2278 4d ago
I also left the netherlands, i paid over 6 figures in taxes last year but it just doesnt make sense with how high labor tax is. Im not paying for boomers retirement
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u/PhoenixProtocol 4d ago
I left NL, not for the best tax optimized country but my current effective tax rate (with some 'loopholes') is pretty low here in Finland <30% at 200k+. That said it has loads of caveats that dont matter for me but for your case prob do.
Portugal not much experience with, the weather is awful imo and doesn't promote productivity. Anyhow, between Malta Cyprus Andorra and Estonia are prob your best choices, out of those. Malta and Cyprus are the best options but the legal part is a bit annoying to deal with. Estonia is very easy as its pretty much all digital and their infrastructure is great for it. Andorra is really nice too and on driving distance to a lot of nice places in case you don't want to reside there >183 days a year, also close to NL.
Tbf, I'd choose employment with the US company, maybe not best tax-wise, but it does open an easier path to move to the US eventually (if thats what you're into), as a contractor there's no way to have an internal transfer. If you have no interest in that, def choose contractor and charge the premium for pension etc.
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u/Sandroo2 4d ago
I can’t give you much advice, but please don’t forget about your retirement!