Income tax
Getting the maximum benefits from your tax deductions. No more worries about your tax return declaration.
Income tax return handled by your advisor
Most of our clients let us handle their administrations using our all-in business administration package. Next to handling their business administration we also handle the income tax return for them. But for those who want this, we offer the income tax return as a separate service as well. We see a demand for this mostly from private individuals.
The level of difficulty for correctly filing the income tax return is quite often underestimated. The income tax is a taxation raised over income sources of:
- Private individuals and/or
- Business owners:
- Self-employed (Dutch: eenmanszaak)
- Partnership firms (General partnership / Dutch: VOF)
- Partnerships that are seen as entrepreneurs for the income tax return.
When filing the income tax return the Dutch ‘social security contribution’ must be taken into account as well.
At Profinancials we are ready to help you to file the income tax return, or handle it completely for you. The choice is yours: whether you prefer our all-in package or would rather make use of our expertise on taxes while maintaining your business administration by yourself.
Income tax return for business owners
The annual tax return you have to file as a private individual is officially called the income tax return. If you are a business owner, we strongly advice you to have a professional assess whether you are eligible as a business owner for the tax authorities as well. Just having your business registered at the KvK (Dutch Chamber of Commerce) is not enough to get this qualification.
Depending this assessment it differs which type of tax form is used when filing your income tax return. There is distinguishment between ‘profits from your business’ and ‘results coming from other activities’.
Are you a business owner when it comes to the income tax return? If so you might qualify for special entrepreneurial facilities. These are tax schemes that only apply to business owners that are eligible business owners according to the rules set by the tax authorities.
Going beyond simply filing your tax returns
When we prepare your income tax return, Profinancials goes beyond simply filling out the available data. We thoroughly assess your personal and business situation. By doing so we examine which tax facilities and benefits you may apply for.
We will check which costs are deductible in your situation or which exemptions you might be entitled to. This can add up saving you quite large amounts of money.
As an added service we do not stop with an assessment of your current position but we will use your past and possible future positions as well.
All this to give you personal advice that you can actually use to your advantage!
Need help on your income tax return?
Feel free to contact us. We are more than happy to tell you what benefits and exemptions we expect you can apply to.
Ferhat Sanci
Tax specialist
Frequently asked questions on income tax returns for business owners
What is the ‘minimum hours criteria'?
To apply for a series of tax benefits the tax authorities have set a rule for a minimum numbers of hours you have to spend in or on your business.
How many hours is this minimum?
The minimum number of hours is set at 1.225 hours each tax/calendar year, counting from January first. This means if you start your business halfway through the year you will still need to meet this criteria. If you run a business next to an employment position than there are other rules in place. You must spend more than 50 percent of your total working time working for your own company. This requirement does not apply if you have not been an entrepreneur in the last 5 years.
What do you get when you meet this minimum number of hours?
When you have spent the minimum hours that are set for the hours criteria than you can apply for a series of tax benefits and exemptions (entrepreneur allowances) that lower the income on which the tax is calculated. Meaning that you will have to pay less taxes.
What kind of working hours count for the minimum hours rule?
Every hour you spend on your business counts. Both ‘direct hours’ in which you are actually working as ‘indirect hours’. Indirect hours means you are doing things for your business, like calling us, market research, learning or reading professional literature that involves your industry.
What is the entrepreneur allowance? (Dutch: zelfstandigenaftrek)
The entrepreneur allowance is a deduction for (income tax) business owners – see also above. This deduction decreases your profits .This means that the total amount of income tax you will need to pay decreases too. The entrepreneur allowance will however be lowered in the years to come.
When do you qualify for entrepreneur allowance?
You are eligible for the entrepreneur allowance when you are a qualified business owner when it comes to income tax and you meet the time criteria (1.225 hours).
How much is the entrepreneur allowance?
The entrepreneur allowance was € 7.030,- in 2020. In the years to come the entrepreneur allowance is reduced in seven steps of € 360,-, followed by eight steps of € 110,- to € 3.240,-
To make it more clear we have created this overview for you:
Entrepreneur allowance per year up to the year 3036:
- 2020: € 7.030,-
- 2021: € 6.670,-
- 2022: € 6.310,-
- 2023: € 5.950,-
- 2024: € 5.590
- 2025: € 5.230,-
- 2026: € 4.870,-
- 2027: € 4.510,-
- 2028: € 4.120,-
- 2029: € 4.010,-
- 2030: € 3.900,-
- 2031: € 3.790,-
- 2032: € 3.680,-
- 2033: € 3.570,-
- 2034: € 3.460,-
- 2035: € 3.350,-
- 2036: € 3.240,-
What is the tax relief for new companies? (Dutch: Startersaftrek)
The tax relief for new companies is in addition to the entrepreneur allowance. When you make use of this tax relief you are allowed to deduct a fixed amount from your profit. This means that the total amount of income tax you will need to pay decreases too.
When will I be eligible for the tax relief for new companies?
You will be eligible for the tax relief for new companies when you meet the following criteria:
- You meet the 1.225 working hours criterion.
- In the 5 years prior to the tax year in question, you were not a business owner for at least one year.
- In the 5 years prior to the tax year in question, you have not claimed the tax relief for new companies for more than twice.
- In the calendar year or in one of the last five years there has been no so-called silent reversion from a private limited company (BV).
The ‘silent reversion from a private limited company means that you end your private limited company and immediately resume your business activities as an entrepreneur for income tax. In that case you have changed your business structure, without settlement of (hidden) profits or debts.
How much is the tax relief for new companies?
The tax relief for new companies is € 2.123,- per year (2020 amount used).
What is the working partner’s benefit?
If you run a business in the Netherlands and your tax partner performs work for your business you may be eligible for additional deductions. Using this possibility means you will get to pay less tax on your profits. The amount depends on the amount of hours your partner works for your business.
When do I qualify for the working partner’s benefit?
You are eligible for the working partner’s abatement when you are a business owner who is liable for income tax in the Netherlands and you meet the hours criterion of 1.225 hours per year in your business. Your fiscal partner needs to spend at least 525 hours without pay for your business or the renumeration should amount to less than € 5.000,-
How much is the working partner’s benefit?
The working partner’s abatement amounts to a minimum of 1,25% and a maximum of 4% of your profits.
