The Dutch hours criterion for self-employed professionals

For Dutch entrepreneurs, the number 1,225 has almost magical properties. If you spend at least 1,225 hours per year on business activities, you can claim tax allowances, like tax relief for new companies and the entrepreneurs' allowance. You could benefit by thousands of euros per year. But how many hours do you have to work each week to get to 1,225 hours? Find out about the most important aspects of the hours criterium.

The hours criterion in the Netherlands

Does the Tax Administration consider you an entrepreneur? You are entitled to a tax benefit called entrepreneurs' allowance. You qualify for this allowance if you can prove you have spent a minimum of 1,225 hours on your business in a calendar year. If you work 8 hours a day, you will reach this number by spending 3 days or 24 hours a week on working in your business. This minimum of 1,225 hours is called the hours criterion (in Dutch).

The following tax benefits apply over 2024:

• Private business ownership allowance
  A fixed deduction from your profit.
• Tax relief for new companies
  Businesses eligible for this allowance may deduct a fixed amount from their profit 3 times within the first 5 years of having started the business. Once you receive your state pension (AOW), you are only allowed to deduct half of the amount for self-employment and start-up deductions.
• Working partner's abatement
  If your fiscal partner also works in your business, you may be eligible for working partner's abatement. This allows you to deduct a percentage from your profit, depending on the number of hours worked by your partner. Your tax partner is the person with whom you file your tax return. 
• R&D tax credit (WBSO)
  If your business conducts research and design projects, you may be eligible for the R&D tax credit. This allows you to deduct part of the costs for your R&D from your profit.

For specific tax questions, go to the Get a head start with the Belastingdienst website. The chat function also accepts English questions. 

Which hours count towards the hours criterion?

You can count all the hours spent on your business. That includes indirect activities, such as keeping records, managing your website, and customer acquisition. And of course you count the direct hours, hours you spend working on an assignment or for a client. The hours spent preparing to start your business also count.

The hours criterion counts the number of hours spent on your business during a calendar year, so from 1 January through 31 December. The date on which you started your business makes no difference. Did you start on 1 July? To benefit from the tax schemes, you need to spend 1,225 hours on your business.

How do I track my hours?

You may track your hours however you want. That could be an overview in Excel, an app or your accounting software. But if, for example, you have a shop or practice that is open 5 days a week, your opening hours already make it clear that you meet the hours criterion. You do not have to keep track of hours then.

The Tax Administration performs spot checks. If they pick your tax return, they will check if or not you have spent 1,225 hours or more on your business. In some cases, they will request evidence, such as emails, your appointment agenda, or bank statements. You may receive a visit from a tax inspector.

What does the Tax Administration mean by 'plausible'?

The number of hours you spend on your business must match your turnover. The Tax Administration calls this 'plausible'. It is not plausible that you have barely any turnover if you worked 1,225 hours.

But if you have just started your business, you will have more unpaid hours. For example, because you have yet to find clients. The Tax Administration will accept that in the beginning. Has your business existed longer? Then you must also have more turnover.

Maternity leave

Have you been on maternity leave? Then you may count the hours from those 16 weeks towards the hours criterion. You then count the average number of hours you normally work per week.

What is the reduced hours criterion for work disability?

A reduced hours criterion applies to entrepreneurs who receive a benefit for work disability. If you receive a Wajong, WIA, WAO, or Ziektewet benefit, the hours criterion is usually 800 hours (in Dutch). Before you start a business, always discuss your plans with the benefits agency, so you know what the effects on your benefit will be.

Does the 1,225 hours criterion also apply to a vof, maatschap, or bv?

If your legal structure is a vof (general partnership) or a maatschap (professional partnership), you can profit from the private business ownership allowance, the tax relief for new companies, and other types of tax relief. Every partner has to spend 1,225 hours on the business, and file their own income tax return. It can happen that one partner does meet the hours criterion while another partner does not.

A bv (private limited company) cannot make use of the private business ownership allowance or the tax relief for new companies.

Does the hours criterion apply to part-time entrepreneurs as well?

There is no reduced hours criterion for part-time entrepreneurs. So, meeting the hours criterion can be quite a challenge if you are a part-time entrepreneur. And if you have been in business for over 5 years, you also need to spend more hours per calendar year working in your business than you do on other activities, such as working in employment.

SME profit exemption

Do you spend less than 1,225 hours on your business in a calendar year? Then you cannot make use of the private business ownership allowance and tax relief for new companies.

But if you are an entrepreneur for income tax purposes, you are entitled to the SME profit exemption. This is because the hours criterion does not apply here. The Tax Administration automatically process the SME exemption when you file your income tax return as an entrepreneur.