Declaring Business Profit

Not everyone who runs a business is automatically considered an entrepreneur for income tax purposes by the tax authority. In general, there are three sources of income in the inkomstenbelasting system:

• Winst uit onderneming — profit from business activities
• Loon uit dienstbetrekking — salary under an employment contract
• Inkomsten uit overig werk — other income (e.g., freelancing without entrepreneur status)

The tax authority evaluates your situation based on the following criteria: Profitability - do you generate profit? If not, it is not a business. Independence - do you make your own business decisions? Capital - do you have investments, equipment, advertising, insurance? Time - how much time do you spend on the activity? Is there a result? Clients - do you have multiple clients, not just one? Visibility - do you promote yourself: website, social media, advertising? Risks - is there risk of non-payment, market dependency? Liability - are you liable for the debts of the business?

You are an entrepreneur for income tax purposes if your activity:

• generates profit,
• is independent,
• involves risks,
• and is performed outside the private sphere.

You are required to file a return as an entrepreneur for income tax purposes if:

• you conduct business activities (e.g., as a zzp'er or VOF owner),
• you are a co-owner of a business (medegerechtigde),
• you provide loans to a business (geldverstrekker).

In that case, you must declare the profit from business activities (winst uit onderneming) by filing a tax return in digital form in one of the following ways:

• through Mijn Belastingdienst,
• using fiscal software,
• through a fiscal intermediary (e.g., boekhouder or belastingadviseur).

In addition to business profit, you also report:

• private income (e.g., salary, rental income),
• deductible expenses: mortgage interest, alimony, medical expenses, voluntary insurance.

If you are neither an entrepreneur nor an employee, your income is classified as "inkomsten uit overig werk".