Partnership deduction

What is the partnership deduction?

The partnership deduction is a part of the entrepreneurial deduction and applies for the entrepreneur that meets the hour criteria and whose partner carries out work without any compensation in an enterprise from which the entrepreneur gains profit.

Requirements for activities partner:

The partner must have worked more than 525 hours for the enterprise.;
The cooperating partner must not have been paid more than €5.000,- in compensation;
The maximum compensation of €5.000,- is not deductible for the entrepreneur and is exempt for the partner.

Can you still be considered for the partnership deduction if you are co-entitled in an enterprise?

If you are co-entitled in an enterprise or you lent money to the enterprise, then the results from that enterprise are considered profit from enterprise. In this case you cannot make use of the entrepreneurial deduction. The partnership deduction is part of the entrepreneurial deduction.

Those co-entitled in an enterprise are, for example, limited partners in a Limited Partnership (Dutch: VC). If you lend money to an enterprise that is factually being used as its own capital, or if the compensation for the loan is strongly dependent of the profit, you are seen as a moneylender.

What is the maximum amount of the partnership deduction?

The maximum amount of the deduction is related to the number of hours that the partner has worked for the enterprise, but a maximum of 4% of the profit. The number of hours must be considered as reasonable. The amount of the partnership deduction is not considered income for your fiscal partner.  

For more information or any other questions, please do not hesitate to contact us at info [at] lupacompany.com.