Entrepreneur deductions: tax deductions in 2023

Introduction

Are you an entrepreneur and do you have a sole proprietorship, partnership, or limited partnership? If so, there are several deductions available for entrepreneurs that will help you pay less tax on your income tax return.

Entrepreneur Deduction

Entrepreneurs may qualify for the entrepreneur deduction. You deduct this amount from your profits, so you pay less tax at the bottom of the line. The maximum rate for the entrepreneur deduction in 2023 is 36.93%. You are eligible for entrepreneur deduction if you have met the tax authorities' hour criterion for entrepreneurs (1225 hours) and must spend more time on your business than other work. The entrepreneur deduction consists of 6 deductions:

1. Self-employment deduction

The self-employed deduction is a fixed amount per year that you can deduct. In 2023, this amount is 5,030 euros.

2. Starter deduction

You can use the starter deduction in three of the first five years of your business's existence. The starter deduction is an increase in your self-employment deduction. The starter deduction is 2,123 euros in 2023.

3. Start-up deduction for disability

You can use the start-up deduction for disability if you were not an entrepreneur in 1 or more of the 5 previous years. In addition, you must meet the reduced-hour criterion of 800 hours. This deduction is a maximum of the profit achieved.

The starter disability deduction in 2023 is:

4. Co-work deduction

The cooperation deduction is a deduction that applies if your tax partner cooperates unpaid in your business. To qualify, your tax partner must contribute at least 525 hours to your business, unpaid or a compensation lower than 5,000 euros, and you yourself must meet the hour criterion.

How much you may deduct depends on how many hours the tax partner:

5. Strike Deduction

The cessation deduction is a fixed amount when you quit your business that you can deduct from your cessation profits. In 2023, this amount is 3,360 euros. You can only use the cessation deduction once in your lifetime, unless you have not used the entire amount, in which case you can use the remainder on subsequent cessation(s).

6. WBSO (Wet Bevordering Speur- en Ontwikkelingswerk).

The WBSO is a tax scheme for companies performing research and development work. To benefit from this, in addition to the hour criterion you must also spend at least 500 hours on recognized research and development work, have a research and development work certificate from RVO.nl. The WBSO reimburses part of the costs and expenses of your research & development work through your tax return.

Other deductions for entrepreneurs

In addition to the entrepreneurial deduction, there are other deductions you can use:

The SME profit exemption

The SME profit exemption in 2023 is set at 14%. You may apply this to your profits after it is reduced by the entrepreneurial deduction. The hour criterion does not apply to this.

Car Costs

Do you need a car for work? Then you can also use your private car for business. You can report your car expenses as a tax deduction.

Operating or business expenses

Think of rent costs, study costs, car costs, advertising costs or energy costs. Different conditions apply to each type of expense, so find out carefully what you can report and what you cannot.

Business investment

When you invest in business assets, you can deduct them from your profit. These assets are used in your company and are not intended for sale. The costs that fall under this are the purchase price, purchase costs and installation costs. Assets that have a lower purchase value than 450 euros you may deduct at once as costs. Business investments under 450 euros are not eligible for the small scale investment deduction.

Kleinschaligheidsinvesteringsaftrek

Investing in business assets makes you eligible for the small business investment deduction (KIA). How much you may deduct from profits depends on the size of your investment.

In 2023, the small business investment deduction is as follows:

Business space rental

Do you rent a business space? Then you can deduct all the expenses you incur for it. If you work in the building where you also live, then you can almost never deduct those costs. You can find more information about this here.

Deductions for investments

Have you invested in your business? Then you can check whether those investments are deductible. If you buy energy-saving or environmentally friendly business assets, you can use the energy investment deduction or the environmental investment deduction, for example. You can use the small-scale investment deduction if you have invested at least € 2400 in a year, for at least € 450 per investment.

Conditions deductions for entrepreneurs

Different conditions apply to each entrepreneurial deduction. For some, for example, you must have met the Inland Revenue's hour criterion; for other items this is not necessary. In any case, it is necessary that you are an entrepreneur according to the Tax Office. Do you do your income tax yourself? Then inform yourself well about the various deductions and schemes and see what conditions they must meet. Your accountant or bookkeeper can also help you, of course.

For more information

You can find information about the various deductions for entrepreneurs on the Tax Office website.