You’re building your business with passion, and your partner? They help with the bookkeeping, pack orders or keep a close eye on the schedule. But did you know this isn’t just handy, but can also be financially smart?
How the Tax Authority (Belastingdienst) views your collaboration makes a big difference for tax purposes. A distinction is made between a working partner and a co-entrepreneur (medeondernemer). Both options have advantages, provided they are properly arranged.
The working partner: working in the business and tax benefits
Does your partner help out in the business, but without official ownership or entrepreneurial risk? Then you can use the working partner deduction (meewerkaftrek) or a working partner remuneration (meewerkbeloning).
With the meewerkaftrek, you may deduct a percentage of your profit if your partner works in the business for at least 525 hours a year. This way your partner is rewarded and you pay less tax.
If you opt for a meewerkbeloning, you pay your partner a reasonable fee for the work. You may deduct those costs, and your partner declares the amount in their income tax return.
In both cases: the collaboration remains informal, but your partner’s work is rewarded and it brings a tax benefit. That way you get more out of your collaboration and out of your profit.
The co-entrepreneur: running a business together, benefiting together
Is your partner more than just a helping hand? Are they named on contracts as well, do they make business decisions and do they genuinely bear entrepreneurial risk? Then the Tax Authority may treat your partner as a co-entrepreneur.
That opens the door to extra tax benefits, such as the self-employed deduction (zelfstandigenaftrek), the SME profit exemption (mkb-winstvrijstelling) and a fair split of the profit. This can bring your total tax burden down considerably. What matters is that the collaboration is genuinely equal. The taxman looks at things like investments, responsibilities and independence in running the business.
An example: what does it get you?
Say your business makes a profit of €80,000. Your partner works in the business and receives a meewerkbeloning of €20,000. You deduct that amount from your profit, so you pay less income tax.
Or you split the profit between you as co-entrepreneurs, so that you both make use of the entrepreneur deductions. That too can easily add up to thousands of euros in tax benefits.
Strong(er) together, for tax too
Whether you choose the working partner or the co-entrepreneur route, it pays to arrange this properly. Not just for the Tax Authority, but also for the balance at home. Because running a business together isn’t just romantic, it’s also simply attractive from a tax point of view.
Not sure what suits your situation best? We’re happy to take a look with you and work out what the working partner or co-entrepreneur arrangement could mean for you.