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Entrepreneurs tax credit (Zelfstandigenaftrek)

The entrepreneurs tax credit (zelfstandigenaftrek) makes a substantial difference in the amount of income tax to be paid at the end of the year. But do you qualify for this credit as entrepreneur?

The entrepreneurs tax credit (zelfstandigenaftrek)

A so called one-man-company, or sole proprietor company, or ZZP company or freelance company is registered with the Dutch Chamber of Commerce. The Dutch Chambers of Commerce notifies the Dutch tax office and from that moment onwards the Dutch tax office expects you to file the entrepreneurs income tax return.

Number of hours

The Entrepreneurs income tax return offers the box to be ticked to apply the zelfstandigenaftrek. In 2021 the tax credit amounts EUR 6.670. In order to be able to tick the box, you need to check if you meet the requirements. One of the requirements is that you meet the minimum number of 1225 hours spend on the company.

Number of hours – court case

A financial auditor that also did process bookkeeping for clients claimed in his 2017 income tax return the Zelfstandigenaftrek. The tax office denied the tax credit based on the fact that he had not met the 1225 hour minimum. The financial auditor went to court, the court agreed with the tax office. The financial auditor went to the higher court, the higher court also agreed with the tax office.

The point is that the tax office asks the financial auditor to proof the 1225 were spend on the company. Such a request from the tax office is obviously done after the tax return was filed. However, any document the financial auditor creates after this request is made by the tax office, is denied as evidence strangely enough. Only reports of the hours made during the actual tax year are accepted. Crucial is to keep track of the hours spend during the actual tax year using the agenda.

The financial auditor claimed for instance to have spent 700 hours on one client, but the invoice send for the work done was EUR 705 in total. Very unlikely number of hours spend on this client the court ruled, hence this statement was dismissed. He lost his claim.

Entrepreneurs tax credit (Zelfstandigenaftrek)
Entrepreneurs tax credit (Zelfstandigenaftrek)

Main source of income

Next to the 1225 minimum hour requirement is the requirement that the income from the company is the main income. If the person has next to his company employment income, that exceeds the profit of the company. Then the criteria of the zelfstandigenaftrek have also not been met.

The entrepreneurs tax credit (zelfstandigenaftrek) and Covid19

Covid19 made the world turn upside down as an act of God. The tax office offers therefore companies that have been hit by the consequences of Covid19 that during the period of January 1, 2021 to July 1, 2021 it is assumed you spend at least 24 hours per week on the company. Even if this is actually not true.

The entrepreneur that has a seasonal influenced patron and the peak of hours made is in the January 1 to June 30 period can apply the same number of hours made in the same period in 2019. That said, you need to be able to justify those 2019 hours.

Tax is exciting

We think tax is exciting and our clients are excited about the entrepreneurs tax credit. A tax credit politicians after decades finally understood, hence they are busy reducing and abolishing this credit. Till this credit exists it does make a difference in your final amount of income tax to be paid.

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