What is an entrepreneur for income tax?
You are an entrepreneur for income tax when your work qualifies as a business. The Belastingdienst decides this, not you and not your clients.¹ It judges what your business actually does, activity by activity.
Your income from work falls into one of three sources. Profit from a business (winst uit onderneming) is the first. Wages from a job (loon) is the second. Income from other activities (resultaat uit overige werkzaamheden) is the third.
Being an entrepreneur for income tax puts your profit in that first source. That status is the first step to the entrepreneur deductions. Most of them also need the 1,225-hour test.
This is a separate test from VAT. Most people register with the KvK, the Dutch Chamber of Commerce. They become a VAT entrepreneur straight away. The Belastingdienst may still not see you as an entrepreneur for income tax. The two tests are different. This page is about the income-tax one. For how the tax itself works once your status is clear, read our guide to self-employed income tax.
Do you run your business through a BV? Then our guide to dividend vs salary from your BV fits you better than this page.
Take Anika. She moved to the Netherlands two years ago and recently left her job to work as a freelance designer. She kept a small part-time contract on the side. She has registered with the KvK and wonders whether the Belastingdienst now sees her as an entrepreneur for income tax. We follow her through this page. Her part-time job does not rule her out. The Belastingdienst weighs her business on the eight factors below.
In short
A judgement, not a form. The Belastingdienst decides your status on your facts and circumstances, per activity.
Eight factors count. Profit, independence, clients and business risk are among them.
The 1,225-hour test is the gate. Meeting the urencriterium unlocks most entrepreneur deductions.
Judged per activity. Only closely linked activities count as one business.
Missing the hours does not cost you your status. It costs you the deductions that hang on them.
The OndernemersCheck gives an indication. It is a guide to your likely status, not a ruling.
No status, no entrepreneur deductions. Your profit then counts as income from other activities.
How does the Belastingdienst decide if you qualify?
The Belastingdienst weighs eight factors together and looks at your whole situation.¹ There is no minimum turnover and no single rule that settles it. It judges the eight factors below against each other, one activity at a time.
The table below lists the eight factors. Clients abroad count like Dutch clients. The factors do not ask where a client is based. Hold Anika against this table before you read on.
| Factor | What it looks at |
|---|---|
| Profit, and how much | Whether the work is profitable and provides a sustainable income |
| Independence | Whether you decide how, when and for whom you work |
| Capital | Whether you put your own money into the business |
| Time | How much time you spend on the work |
| Clients | Whether you work for several clients, not just one |
| External visibility | Whether you present as a business, through a website, KvK entry or ads |
| Business risk |
What if you do not qualify as an entrepreneur?
Then your profit counts as income from other activities, not as business profit. You still pay income tax on it, worked out in much the same way. The difference is the deductions.
If you do have the status, these deductions apply. The self-employed deduction (zelfstandigenaftrek) and the starter's deduction need two things. You need the status and the 1,225 hours. We explain that hours test further down. The SME profit exemption (MKB-winstvrijstelling) comes with the status alone. You find the amounts and conditions on our page about the self-employed deduction.
Money you invest in business assets can bring a further relief, the small-scale investment allowance (KIA). We cover that on our page about business asset depreciation.
Where does the 1,225-hour test fit in?
Your status and the urencriterium are two separate tests. Status decides whether your profit is business profit at all. The urencriterium then decides whether most of the entrepreneur deductions come with it.³
So you can be an entrepreneur for income tax and still miss the 1,225 hours. Your profit stays business profit. The self-employed deduction falls away. Did you start partway through the year, for example after you moved here? You still need the full 1,225 hours in the months that remain.³
The rule itself lives on one page. It covers which hours count, what happens if you start mid-year and how to make your hours plausible. Our guide to the hours criterion sets out all of it. Anika will check her own hours against that page before she counts on deductions.
| What is at stake | What applies |
|---|---|
| With entrepreneur status | Your profit is business profit, winst uit onderneming |
| Without it | Your profit is income from other activities, worked out in much the same way |
| Entrepreneur deductions | Status first and then, for most of them, the 1,225-hour test on top |
| SME profit exemption | Comes with entrepreneur status, whether or not you meet the hours test |
| Investment allowance | Needs entrepreneur status. Income from other activities does not qualify |
| Business costs | Deductible either way, because business costs stay business costs |
“People assume their KvK registration settles it. It does not. We look at how you actually work: how many clients, who carries the risk, how you show up as a business. That is the picture the Belastingdienst weighs, and it is the one we build with you.”
What does this mean for you?
Match your own situation against the eight factors. Look at how you really work: your clients, your risk, how you show up as a business. Run the OndernemersCheck for an indication of where you stand.
Back to Anika. She has one steady client, a second on the way and a part-time contract alongside the business. Whether she finally qualifies is a facts-and-circumstances call. We work it out with her before she files.
So it pays to get your status right at the start.
Do you work mostly for one client? Then a separate question can come up, whether you are truly self-employed. We cover that on our page about freelancing (zzp) versus employment. Did you leave a job with the 30% ruling? The ruling covers wages from an employer, never your business profit. Ask us what happens to it when you start your business.
What we do for business owners is on our page about tax advice for entrepreneurs.
¹ belastingdienst.nl, Wanneer bent u ondernemer voor de inkomstenbelasting · Accessed
² belastingdienst.nl, Ben ik ondernemer voor de inkomstenbelasting? (OndernemersCheck) · Accessed
³ belastingdienst.nl, Urencriterium · Accessed