Tax is the most confusing part of freelancing — and the part that catches most people out. This guide gives you a practical overview of what you owe, what you can deduct, and what to do about it — for six major countries.
⚠️ Disclaimer
This is general information, not tax advice. Tax rules change annually. Always consult a qualified accountant or tax advisor for your specific situation.
🐕 TL;DR
Set aside 25–35% of every payment for taxes. Register for VAT/GST once you hit the threshold. Track all expenses. Keep your invoices accurate — they are your tax records.
As a freelancer, you typically pay three types of tax:
Levied on your profit (revenue minus allowable expenses). The more you earn, the higher the rate — most countries use progressive bands.
Covers pension, healthcare, and disability contributions. As a freelancer, you pay both the employee AND employer share. This is why the effective rate is higher than for employees.
You collect this from clients on behalf of the government, then remit it. It's not your income — but failing to register when required means you owe it out of pocket.
Critical difference from employment: no employer withholds tax for you. You are responsible for calculating, setting aside, and paying your own taxes — typically quarterly or annually.
Income tax (IB): Progressive rates — 36.97% up to €75,624, 49.5% above. But many deductions reduce your taxable base significantly.
Key deductions: Zelfstandigenaftrek (€3,750 in 2026), Startersaftrek (first 3 years), MKB-winstvrijstelling (13.31% profit exemption).
BTW (VAT): 21% standard rate. Quarterly BTW aangifte. KOR exemption if turnover under €20,000/year.
Social: ZZP'ers are responsible for their own AOV (disability insurance) — not mandatory but strongly recommended.
Filing: Annual IB return (aangifte inkomstenbelasting), quarterly BTW aangifte.
Income tax: Personal allowance £12,570 (tax-free). Basic rate 20% (£12,571–£50,270), Higher rate 40% (£50,271–£125,140), Additional rate 45% above.
National Insurance: Class 2 NIC (flat rate) + Class 4 NIC (9% on profits £12,570–£50,270, 2% above).
VAT: Register when turnover exceeds £90,000/year. Standard rate 20%.
Filing: Self Assessment annually (31 January deadline). Payments on account twice per year if tax bill over £1,000.
Late payment: You can charge 8% statutory interest on late invoices under the Late Payment of Commercial Debts Act.
Einkommensteuer: Progressive rates from 14% to 45%. Solidarity surcharge (Solidaritätszuschlag) applies for higher earners.
Kleinunternehmerregelung: If annual revenue under €25,000, you can opt out of VAT collection (no Umsatzsteuer on invoices, no deduction of input tax).
Umsatzsteuer (USt): Standard rate 19%, reduced rate 7%. Quarterly advance returns (Voranmeldung).
Gewerbesteuer: Trade tax may apply if you are classified as a Gewerbetreibender (not Freiberufler). Most creative/consulting freelancers are Freiberufler and exempt.
Filing: Annual Einkommensteuererklärung + quarterly Umsatzsteuer-Voranmeldung.
Micro-entrepreneur (auto-entrepreneur): Simplified regime for small freelancers. Pay a flat % of revenue (e.g. 22% for services) covering all social charges + income tax via versement libératoire.
Revenue limits (2026): €77,700 for services (BNC/BIC). Above this, standard régime réel applies.
TVA (VAT): Micro-entrepreneurs under €36,800 are TVA-exempt (franchise en base). Above: 20% standard rate.
Social: URSSAF contributions included in flat-rate calculation for micro-entrepreneurs.
Self-employment tax: 15.3% on net self-employment income (12.4% Social Security + 2.9% Medicare). This is on top of income tax.
Income tax: Federal rates 10–37% depending on income bracket. Plus state income tax in most states (0–13.3%).
Quarterly estimated payments: Required if you expect to owe over $1,000. Due April 15, June 15, September 15, January 15.
Schedule C: Report self-employment income and expenses. QBI deduction (20%) available for most freelancers.
Rule of thumb: Set aside 30–35% of every payment. Use a separate savings account.
Income tax: Progressive rates. Tax-free threshold A$18,200. Then 19%, 32.5%, 37%, 45%.
GST: Register when revenue exceeds A$75,000/year. Standard rate 10%. File Business Activity Statement (BAS) quarterly.
Superannuation: Not compulsory for self-employed, but voluntary contributions are tax-deductible and recommended (11.5% is the employer rate for guidance).
PAYG instalments: Quarterly prepayments of expected income tax once you earn above a threshold.
Filing: Annual tax return (October 31 if self-lodging, later with a tax agent).
Most countries allow you to deduct ordinary and necessary business expenses from your taxable income. Common deductions:
| Expense | Notes |
|---|---|
| Home office | % of home used exclusively for work |
| Computer & equipment | Full cost if 100% business use; partial if mixed |
| Software & subscriptions | Notion, Adobe CC, Figma, Chaser — all deductible |
| Professional development | Courses, books, conferences related to your work |
| Professional services | Accountant fees, legal advice, bookkeeping |
| Travel (business) | Client visits, conferences; not commuting |
| Marketing & advertising | Website, ads, business cards |
| Business insurance | Professional indemnity, public liability |
Keep every receipt. Most tax authorities require evidence. A shoebox of receipts is better than no records. Use a dedicated business bank account to make tracking easy.
Your invoices are not just payment requests — they are your tax records. Every invoice you issue represents taxable revenue. Every invoice you receive for a business expense is a deductible cost.
This means accurate invoicing is essential for accurate tax filing. Missing an invoice means understating your income (a tax risk). Missing a supplier invoice means overpaying tax (a cash loss). Both are preventable.
Invoice automation tools like Chaser don't just help you get paid — they create a clean audit trail of your revenue. Every invoice, every amount, every date — all tracked, all searchable.
Chaser tracks every invoice and sends automated reminders until paid. Your accountant will thank you. Free for up to 3 invoices.
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As a general rule, set aside 25–35% of every payment you receive for taxes. In the US, self-employment tax alone is 15.3% on top of income tax. In the UK, Class 4 National Insurance + income tax can reach 29%+ for higher earners. In the Netherlands, combined income tax + social premiums can exceed 40% for higher incomes. Set up a separate 'tax account' and transfer a percentage immediately when each payment arrives.
In the US: yes, estimated quarterly tax payments are required (due April, June, September, January). In the UK: Self Assessment is annual, but payments on account are made twice per year. In the Netherlands: quarterly BTW (VAT) returns are required; income tax (IB) is annual. In Germany: quarterly advance income tax payments (Vorauszahlungen) are often required. Check your local rules — missing estimated payments usually results in penalties.
Yes, in most countries. In the US: you can deduct the percentage of your home used exclusively for work (the 'simplified method' allows $5 per square foot, up to 300 sq ft). In the UK: HMRC allows £6/week flat rate. In the Netherlands: home office deductions are complex — only allowed if you have a separate space used exclusively for work. Keep records.
Only if your revenue exceeds the registration threshold: UK: £90,000/year; Netherlands: €20,000/year (KOR exemption below this); Germany: €25,000/year (Kleinunternehmerregelung below this); Australia: A$75,000/year; US: no federal VAT/GST (but some states have sales tax on services). If you exceed the threshold you must register, collect, and remit VAT/GST.
Income tax is levied on your profit (revenue minus expenses). Self-employment tax (US term) covers Social Security and Medicare — equivalent to National Insurance (UK), ZZP social premiums (NL), or Sozialversicherung (DE). As a freelancer, you pay both the employee and employer share, which is why it's higher than what salaried employees see on their payslips.