Hours criterion unraveled: Which hours count for the self-employed deduction?

Hey there, driven entrepreneur! You have probably heard of the self-employed person's deduction and the starter's deduction. But did you know that you must meet the so-called hour criterion for this? This means that you must spend at least 1,225 hours per year on your business. But which hours actually count? Let's take a closer look at that. 

1. Direct hours

These are the hours you spend on activities that directly generate income. Think of:

• Carrying out assignments for customers.
• Conduct sales conversations.
• Writing quotations.

Tip: a simple way to calculate the number of direct hours is to divide your total turnover by your hourly rate. For example, annual turnover = 50,000 and hourly rate is € 47.50, then you already have at least 1,052 "hard" hours.

2. Indirect hours

These are the hours you spend on activities that do not directly generate income, but are necessary for your business. For example: 

• Administration and accounting.
• Following courses and training.
• Attend networking events.
• Maintenance and updating of your website.

3. Travel hours

Do you travel for your business? Then these hours also count. Whether you go to a customer, visit a trade fair or go purchasing. 

4. Study and training hours

The time you invest in yourself also counts. So the hours you spend on courses, training and self-study for your company are also included. 

Points of attention 

• What matters is that the hours you specify are plausible. So keep thorough time records.
• If you have multiple companies, the hours you work for all these companies count towards the hours criterion.
• Your private time or time spent on hobbies logically does not count, even if they are indirectly related to your business.
• The closer you get

What about illness or pregnancy?

If you are ill or on maternity leave, this may affect the number of hours you work. Fortunately, the Tax Authorities have regulations for this, so that you can still meet the hour criterion. Be well informed about this! 

Inspection by the tax authorities

The tax authorities may decide to check whether you have actually met the hours criterion. With lower turnover, there is a greater chance that the tax authorities will doubt the actual hours worked. This increases the chance of an inspection. With a modest turnover, it is therefore advisable to keep detailed time administration.

When is a separate time registration not necessary?

If your turnover is so high that it is obvious that you have met the hours criterion, separate time registration is often unnecessary. For example: with a turnover of € 100,000 and an hourly rate of € 47.50, this results in 2,105 "direct" hours. It could logically be concluded from this that the hour criterion has been met. Please note: this statement only applies if your entire turnover is based on hours. 

Conclusion 

The hours criterion is more than just 'working hours'. What matters is that you are demonstrably active and serious about your business. Are you unsure whether certain hours count? Or do you want to be sure that you meet the hour criterion? Our team is ready to advise you. Click here for personal advice and make sure you make the most of all the benefits.