An adult living with parents starts a business: what are the implications?

Liability

You are not liable for business debts of a child aged 18 or over. However, if your child uses your address as a visiting address, creditors can come to your door if your child has debts. This business address is public.

Duty of care

So, you are not liable for your adult child. But until the child is 21, the parent or carer does have a duty of care (in Dutch). The parent must provide shelter, clothing, education, food, and medical assistance if the child gets into financial trouble.

Consequences for the family home

Before a child starts a home-based business, it is important to check whether this is allowed. If you rent a house, the rental contract often states that business activities are not allowed. Do you own a house and have a mortgage? Then the mortgage deed may state that no business activities are allowed in the house.

If a business is allowed in your home, check the following:

Environment plan

Your municipality's environment plan shows where homes, shops, catering industries and businesses are allowed. Does the plan for the business fit into the environment plan? If so, a notification to the municipality is usually enough. In some municipalities, you have to apply for a conversion permit (onttrekkingsvergunning). With this, the municipality gives permission to use the home as a business premises.

Building or renovating

Does the business need a garage to be converted into a beauty salon or workshop, for example? You usually need to apply for a permit for this type of building change.

Owners' association

Do you live in an apartment building? Then check whether there are any rules about a home-based business in the owners' association's (vereniging van eigenaars, VvE) deed of division.

Rules for starting from home

Find out what other rules apply to starting a business from home. This depends on what the business will be doing. For example, there are special rules for a shop or catering business at home.

Allowances

The child's income may affect the amount of allowances the parent(s) receive.

Rent allowance

If you have a child living at home with their own income, you may get less rent allowance (huurtoeslag). Is your child younger than 23? Then the Netherlands Tax Administration will not count part of your child's income when calculating the rent allowance. This exemption (in Dutch) also applies in the year the child turns 23.

Healthcare benefit

The income of a grownup child living at home does not affect the healthcare benefit (zorgtoeslag).

Benefit partner

Is the child older than 27? Then the Tax Administration may consider you to be a benefit partner (toeslagpartner). In that case, a child's income affects all benefits from the Tax Administration. Check here whether you are benefit partners.

Effect on benefits

An entrepreneurial child's income may affect the social assistance benefit (bijstand). Other benefits such as WW, WAO, WIA, Wajong, IOW benefit, and state pension will not be affected.

Social assistance

Is your child younger than 27? Then your social assistance benefit remains the same.

The rule for shared living costs (kostendelersnorm, in Dutch) may apply to children aged 27 or older. The government then regards your child as a co-occupant with whom you can share living expenses. Your social assistance benefit may then be reduced.

Assets in Box 3

The assets of a child older than 18 do not have to be added to the parent’s assets in box 3 (in Dutch) in their tax return.

Insurances

Check together that you are properly insured. Does the child has business equipment in the house, such as a computer or tools? Check with your insurance company whether these are covered by the home contents insurance (inboedelverzekering). Also check the building insurance (opstalverzekering). Some building insurance policies do not cover damage caused by fire or theft if there is a business space at home.

Energy and waste costs

Allow for higher energy consumption, and therefore higher costs. Another cost is the business waste collection charge. This is a kind of tax you must pay to the municipality for collecting and processing commercial waste. Check the municipality's website to find out what the rules are in your area and what you have to pay.