As an independent contractor, you are responsible for paying taxes on your income. You must pay part of your taxable income to the tax office. However, with the so-called entrepreneur’s deduction, which not every self-employed person knows, you can withdraw part of your taxable income. The bottom line is that this can save you a lot of money, and in this article we’ll list it all.
Independent deduction
The business tax deduction is a collective term for a number of tax advantages. The self-employed and start-up deduction will be important for many entrepreneurs. In addition, the deduction for research and development services, the strike deduction and the cooperation deduction are also included.
The business deduction is overlooked by many, but it can lead to a lot of savings without any effort.
The self-employed deduction is an allowance that applies if you have worked at least 1,225 hours in your company in a financial year and have not yet reached statutory retirement age.
The hourly criterion is a strict requirement. It doesn’t matter what month you started as an independent contractor, you must always meet the minimum requirements.
This year the allowance for the self-employed is 3,750 euros. This simply means that you can deduct 3,750 euros from your winnings. This reduces your taxable income.
This deduction decreases every year. Check out the table below to see how the data has trended and what to expect in the coming years.
| 2021 | 6,670 euros |
| 2022 | 6,310 euros |
| 2023 | 5,030 euros |
| 2024 | 3,750 euros |
| 2025 | 2,470 euros |
| 2026 | 1,200 euros |
| 2027 | 900 euros |
If your profit is less than the self-employment deduction, you can also transfer the remaining amount to another tax year. You can offset this so-called “unrealized self-employment deduction” up to nine years later.
Starter trigger
Start-ups can add the so-called starter deduction to the self-employed deduction. In the first five years as an entrepreneur, you can use the starter deduction a maximum of three times.
The starter deduction this year is 2,123 euros.
All information about these and some other deductions can be found on the tax office website.
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