In the event you have a company in the Netherlands and you think about running it with your partner (wife or husband) in order to benefit from the tax credits twofold and have the taxable income taxed two times half, so the full tax brackets are used two times, does that work?
That depends. First the math. Total profit is EUR 100.000. If only one entrepreneur, then the profit is reduced with EUR 7.280 entrepreneurs discount, so total is EUR 92.720. This amount is reduced with 14% small business discount, that is EUR 12.980, so taxable profit is EUR 79.740. This profit is taxed at EUR 34.881 and reduced with EUR 3.724 general tax benefits is a final tax amount of EUR 31.157.
Now your partner (wife or husband) is 50% owner of the company (VOF is the name of such a type of company) and the EUR 100.000 is split in two times EUR 50.000. The EUR 50.000 is reduced with EUR 7.280 entrepreneurs discount, to EUR 42.720. This amount is reduced with 14% small business discount, that is EUR 5.981, so the taxable profit is EUR 36.739. This profit is taxed at EUR 14.446 and reduced with EUR 3.724 general tax benefit is a final tax amount of EUR 10.723. Two times tax is EUR 21.446.
By splitting the profit you can save EUR 9.711 in tax, but can you? Yes you can if your partner (husband or wife) is a genuine entrepreneur. If you partner is only doing the administration, and you have a window glass repair company, then your partner does not qualify to be regarded an entrepreneur. Your partner needs to be able to repair/change a window. Same with doctor practice, dental practice and all other professions that demand an expertise or education in order to be able to execute the job at hand.
In case you are interested to learn more about this possibility, please contact us.