The self-employed person’s deduction 2018 and 2019

The self-employed person’s deduction for 2018 and 2019 and the entrepreneur’s deduction are an important deduction for many self-employed entrepreneurs. Your deduction can be up to 7,280 if you are not yet entitled to AOW. If you are also a starting entrepreneur, the amount of the deduction will increase further and a negative result may be offset against future years with the permission of the Tax Authorities. From 2020, the option to offset your deduction at the top income tax rate will no longer apply, because the maximum deduction will be reduced by 3% to 37% for four consecutive years.

Contents

  • What is the self-employed person’s deduction for 2018 and 2019?
  • Amount of self-employed person’s deduction 2018 and 2019
  • Self-employed deduction as a starting entrepreneur
  • Self-employed person’s deduction 2018 and 2019
  • Deduction 2016, 2017, 2018 and 2019 for entrepreneurs
  • Conclusion self-employed deduction and starter deduction

What is the self-employed person’s deduction for 2018 and 2019?

Since January 1, 2012, the self-employed deduction has been a fixed amount and no longer via complicated brackets depending on the profit you make. It is a deduction from your taxable income that you can make use of under the following conditions:

  • You are an entrepreneur;
  • You spend more than 50% of your working time on your business. The arrangement is somewhat more flexible for a starter;
  • Your time administration and time registration show that you spend more than 1,225 hours per calendar year on your business.

Amount of self-employed person’s deduction 2018 and 2019

It makes a difference to the amount of the deductible whether you are younger than 65 years and one month or not. If you are an entrepreneur and not yet entitled to state pension, the self-employed person’s deduction is a maximum of 7,280. The deduction may also be lower if your profit was low. The profit is a kind of ceiling on your self-employed deduction. If your profit in 2018 was lower than the maximum self-employed deduction, you cannot realize the deduction in its entirety and you will not receive the difference back from the tax authorities. Not even as a refund on payroll tax. In the event of a negative profit, the self-employed person’s deduction is even zero. An exception to this is the starting entrepreneur, a starting freelancer or self-employed person, for example.

Self-employed deduction as a starting entrepreneur

The Tax Authorities define a starting entrepreneur as an entrepreneur who:

  • Was not an entrepreneur in one or more of the past five years;
  • In recent years, the self-employed deduction has not been applied more than twice.

A starting entrepreneur may also be confronted with a low profit, meaning that a full deduction of the self-employed person’s deduction leads to a negative profit. In fact, this happens regularly for a starting entrepreneur, because the business has to be started up and there are additional costs in the beginning. That is why there is some leniency for the starting entrepreneur. The tax authorities allow him to deduct a negative profit after deduction of the full self-employed person’s deduction from future profits for nine years and thus has the opportunity to obtain the full deduction. In addition, the starter has an extra starter’s deduction of 2,123 euros if he is not entitled to AOW and otherwise an extra deduction of 1,062 euros. Finally, a starting entrepreneur may also deduct the unrealized self-employed deduction from the other income in box 1 of the income tax, such as wages earned elsewhere.

Self-employed person’s deduction 2018 and 2019

The self-employed deduction is also 7,280 in 2018 and 2019, for entrepreneurs who have not yet reached state pension age. Moreover, if your profit in one year is too low to fully utilize the self-employed deduction, you may offset the unrealized self-employed deduction in the following nine years. In addition to the self-employed deduction, the starter’s deduction of 2,123 applies if:

  • Was not an entrepreneur in 1 or more of the five preceding calendar years.
  • You did not use the self-employed person’s deduction in your tax return more than twice in that period.

Deduction 2016, 2017, 2018 and 2019 for entrepreneurs

This means a tax deduction as shown in the table below:

Entrepreneur’s deduction IB:

 

2016

2017

2018

2019

Self-employed deduction

7,280

7,280

7,280

7,280

Additional self-employed deduction for starters

2,123

2,123

2,123

2,123

Starter deduction in the event of disability (maximum)

12,000

12,000

12,000

12,000

Conclusion self-employed deduction and starter deduction

The self-employed person’s deduction and starter’s deduction can provide a nice boost from a tax perspective for a self-employed person. It is therefore a pity that it is regularly proposed to abolish these deductions. After all, a self-employed person has a hard enough time and does not want more headwinds. Entrepreneurship in the country could actually be further stimulated and not made more difficult. If you are entitled to the self-employed deduction, you may also be eligible for the income-related combination discount 2018.

read more

  • Entrepreneur’s deduction 2021
  • Self-employed person’s deduction 2020 and SME profit exemption