When are you an entrepreneur?
For a number of fiscal facilities it is important whether or not you are considered an entrepreneur. Because all entrepreneurs are eligible for these facilities. These facilities can be very beneficial for your enterprise. See the following text for all advantages.
What are the requirements to be considered an entrepreneur?
To see if you meet the requirements, you can ask yourself the following questions:
Is there a matter of market orientated operating?
Is it matter of organisation of work and capital?
Is there a matter of risks?
Is there a matter of a prospect of profit?
If you can answer the questions mostly with yes, you can usually speak of independent entrepreneurship.
When am I not an entrepreneur?
You are not an entrepreneur if you are in employment or of you obtain result from other works.
When am I in employment?
You are in employment when (a) an employer-employee relationship exists, (b) you receive wages and (c) you work for your client. However, sometimes you cannot speak of an employer-employee relationship, but you are still considered to be in employment.
When am I a Freelancer (-recipient of income from other activities)
If you are not an independent entrepreneur and you carry out work, that cannot be designated as employment then you can speak of result from other works and you are a Freelancer.
If you own your own enterprise, that does not automatically mean that the Tax Authorities consider you as an entrepreneur. This is important for the application of a number of fiscal regulations. When considering whether or not you are an entrepreneur a number of aspects play a role. Firstly, the question whether or not you can speak of an employment. The relation between client and contractor can be approached in three different ways.
In employment or fictitious employment;
Entrepreneurship: contractor and client;
Result from other works.
You can speak of employment when an employer-employee relationship exist, a professional obligation to perform work and an obligation to pay wages. An employer-employee relationship is, simply put, when you have a boss who determines at what time, when, where and how you perform your work. In this situation the client can be called an employer and he/she must act as the withholding agent for social premiums and pay roll taxes.
Exception: Sometimes, even though you can speak of an employer-employee relationship, no employment exist. In this case you can speak of a fictitious employment. This applies to, among others, artist with a short (less than three months) employment. If your relationship is designated as a fictitious employment and you are in possession of a VAR-wuo (Declaration of Independent Contractor Status- profit from enterprise), then the fictitious employment does not apply and you are considered an entrepreneur. If, when performing the work, no employer-employee relationship or fictitious employment exists, then you can possibly speak of independent entrepreneurship. There are certain requirements to be considered as an independent entrepreneur, which we will discuss below. There must be market orientation, organisation of work and capital, entrepreneurial risks and a prospect of profit. To test these criteria you can ask yourself a couple of questions:
Can I speak of organisation of work and capital?
Can I speak of company assests?
Do I own a workspace?
Do I have to perform work to receive my payments?
Can I speak of risks?
Is there a possibility I might not land the contract?
Is there a possibility I might not get a return on my investments?
Is there a possibility my debtors might not pay me back?
Can I speak of a prospect of profit?
Is my goal to make profit?
Can I, within reason, expect to make profit over a period of time?
If you can answer the questions mostly with yes, you can usually speak of independent entrepreneurship. For a number of fiscal regulations it is important whether or not you are considered an entrepreneur or non-entrepreneur (result from other work, before known as freelancer), because only entrepreneurs are eligible for these regulations. The regulations are, among other:
Self-employed person’s deduction
Small-scale investment deduction
Fiscal retirement reserve (FOR)
Research and development deduction
If you are not an independent entrepreneur, but you do carry out work for a client that cannot be designated as an employment, then you can speak of Result from Other Works (Dutch: ROW). The fiscal regulations such as self-employed person’s deduction, starters deduction and investment deduction are, in this case, not applicable. Pay attention! You are required to charge for Vat and maintain your accounting records.