Entrepreneurs, as well as their staff, must constantly stay up-to-date in their field. Sometimes, new expertise is also necessary to further develop themselves.
But what is the tax situation with such costs?
Standing still means going backward, so you do everything you can to stay ahead in your field and perhaps even to develop additional activities with an eye to the future. But which tax aspects are important for the self-employed in income tax matters, the managing director (DGA), and employees? What should you pay attention to, and what did the court recently find?
Keeping knowledge up to date
For self-employed individuals, it's important to determine whether the costs are incurred to maintain their current professional knowledge, for example, a tax advisor taking a course to stay up-to-date on current tax regulations. Such costs are deductible.
Also for hours criterion!
The hours worked also count towards the so-called "hours criterion." For several tax benefits, such as the self-employed persons' deduction, self-employed entrepreneurs are required to work at least 1,225 hours annually in their business. Study hours to maintain professional knowledge count towards this number of hours. This was recently confirmed by the Zeeland-West-Brabant District Court (ECLI:NL:RBZWB:2022:4116). .
New expertise.
Self-employed entrepreneurs studying to acquire new professional knowledge cannot deduct these costs from their profits. Consider the aforementioned tax advisor who is pursuing a degree to enable them to perform other work in the future. They may be eligible for these costs under the new STAP budget, which has replaced the deduction for training costs.
NB. Moreover, the hours spent on this study do not count towards the hours criterion, as also became apparent in the aforementioned lawsuit. What happened?
Foot reflexology in addition to pedicure.
In the case in question, a pedicurist had completed a VoetreflexPlus training course after completing her training. The court ruled that this could not be considered a course to maintain existing professional knowledge. It involved new professional knowledge, and therefore these hours did not count toward the hours criterion.
And what about the managing director or your staff?
As a managing director (DGA), you are considered an employee for tax purposes. Therefore, the same rules apply to DGAs in this regard as to employees. These rules essentially stipulate that the costs of education necessary for work can be reimbursed tax-free. This includes the costs of courses, conferences, and professional literature. Costs of education aimed at personal development, such as tuition fees or textbooks, can also be reimbursed tax-free under certain conditions. The requirements are that the costs are not already being reimbursed by someone else, the study or training program is aimed at fulfilling a future profession, and the employer provides or promises reimbursement before the end of the calendar year in which the costs are incurred.
Taxable or work costs scheme?
If the aforementioned requirements are not met, the reimbursement is taxable. To avoid this, you can also include the reimbursement in the work-related costs scheme. The reimbursement will then remain tax-free, but if your allowances and benefits exceed the tax-free allowance, you will pay 80% tax through the final assessment.
As a self-employed person, distinguish between tuition fees incurred to maintain your current professional knowledge and those not. If not, they are not deductible from your profit and do not count towards the hours criterion.
