As a self-employed person in the Netherlans, you must work at least 1.225 hours per year in your business to be eligible for various tax benefits. This is called "het Urencriterium", or hours criterion and is the limit that the Tax Administration uses to determine whether you are an entrepreneur. If you meet this requirement, you meet the hours criterion and you are eligible for various forms of tax deduction.
Hour criterion requirement: 1.225 hours
According to the hours criterion, you must spend at least 1225 hours per year on your company. Lets do a small calculation what this mean. Of course you also want to go on holiday every now and then. If you enjoy 5 weeks of vacation per year, you only have to work on your company 26 hours a week.
NB! If you start as an entrepreneur halfway through the year, you still have to work 1225 hours on your business to qualify for these tax benefits. If you start exactly halfway through the year as an entrepreneur, you will have to work a little more than 47 hours a week on your company to meet the hours criterion. If you take a holiday or if you get sick, you will have to work even more hours in the other weeks.
The Dutch Tax Authorities carries out regular checks to check whether entrepreneurs have submitted their tax applications correctly and whether the information is correct. It is therefore possible that you as a self-employed person are checked, for example whether you meet the requirements of the hour criterion as a self-employed person. That is why it is good to know how to keep track of this and what to show when you are checked.
Simply put, you have to prove that you put in these hours. This can be done on the basis of invoices, on which your hours worked must be stated. You can keep track of your hours in the agenda, then you must be able to demonstrate that your appointments are real, for example with a trip administration. Or you can track your hours for every hour you work. Again, just noting the hours may not be enough if the tax authorities are in doubt, then you must also be able to substantiate that those hours are correct, for example with an confirmation for an appointment.
Important to register all your hours
Not only can you register your billable hours, you can also keep track of hours that are not billable. These are hours that you spend on your company, but for which you cannot send an invoice. Think of a sales call, network event or keeping the administration. You can read here what are (non) billable hours.
Can you mean all the hours?
For the hours criterion, you count all the hours you have worked for your company. You cannot write down hours that you do not work, such as during illness and vacation. There are also a few special cases, such as standby. For example, are you available all weekend for a malfunction? Then you can only count the hours that you actually worked on a malfunction.
Reduced hours criterion
There are reduced hours in the event of pregnancy and incapacity for work. During the pregnancy you can count the hours for 16 weeks. And in the event of incapacity for work, the hour criterion has been lowered to 800 hours on an annual basis.
What happens if you don't make it?
It's not bad in itself. But of course you miss the self-employed and starters deduction, and that is a shame. But again no disaster. this is something to keep in mind when you start. Maybe it's smart to wait a little while so you can start on January 1. Or you can start a little earlier in the year so that you can more easily achieve your hours for the hours criterion.
Don't forget that you can also count your hours for bringing in new customers, such as networking, sales and website improvements. Setting up and maintaining your administration, travel costs that you may or may not charge to your customers and shopping for your company also count as hours. So make sure to write them all down as well.
Always check what the Dutch tax authorities say about it if you have more questions.