All deductions for entrepreneurs in a row

Overall, there are three types of tax deductions:

  1. entrepreneurial deduction and SME profit exemption
  2. investment deduction
  3. tax reserves

You can not just include these deductible items in your tax return. As an entrepreneur, you must meet all kinds of conditions set by the tax authorities. Please conduct your research thoroughly and seek the advice of an accountant or auditor.

Below we describe the main deductions in a nutshell. Do you want to do a quick check to see if you are qualified? Then start the free independent deduction scan >>

1. Entrepreneurship deduction and SME profit exemption

The business deduction relates to various tax deductions. These may be of interest to entrepreneurs in general, start-up entrepreneurs or entrepreneurs with partners. These are the following deductions:

These deductible items are, among other things, conditional on the tax authorities considering you as an entrepreneur. You must also in most cases meet the hourly criterion.

Additional conditions can also be set. You will find the current conditions and amounts for each deductible item on the Tax Authorities’ website.

Self-deduction down

The self-employed deduction provides less benefit since 2020. The deduction is reduced in four annual steps of 3 percentage points to the so-called basic rate. In 2021 you were allowed to deduct € 6,670, in 2022 it is € 360 less and therefore € 6,310.

SME profit exemption

You get the SME profit exemption if you are an entrepreneur. You apply this tax deduction after you have reduced the profit with the entrepreneurial deduction. Of course, there must still be sufficient profits left for the SME profit exemption.

2. Investment deduction

The investment deduction involves various tax deductions just like the entrepreneur deduction. These can be of interest to entrepreneurs who make (larger) investments in certain business assets. These are the following deductions:

These deductible items are, among other things, conditional on you being subject to income or corporation tax.

In addition, not all business assets are eligible. You must also take into account the minimum investment amount. You will find the current conditions and amounts for each deductible item on the Tax Authorities’ website.

Sale surcharge

In some cases, you will have to repay part of the investment deduction. This is possible if you dispose of business assets (such as purchases or donations) for which you have applied for an investment deduction in previous years. This is called the disposal allowance.

3. Fiscal reserves

In addition, there are also some tax reserves that you can take advantage of as an entrepreneur, namely:

Reinvestment reserve

The reinvestment reserve is a first example of a fiscal reserve. By doing so, you reserve an amount, and as with other deductible items, you reduce your taxable profit. With the reinvestment reserve, you do this by reserving the proceeds from the sale of one business asset to the purchase of another business asset.

The condition, however, is that you actually intend to reinvest in a business asset on the balance sheet date. You must also take into account rules for depreciation of the reinvestment reserve. It is also possible that the reserve will be released in a number of situations, including if you decide not to reinvest.

equalization reserve

Do you incur high costs once every few years for periodic maintenance of fixed assets? For example, for the maintenance of your business? Then the equalization reserve can be interesting.

You must not form an equalization reserve for annually recurring expenses or the purchase of the company’s assets. In addition, you need to take into account a wide range of other factors. You can find it on the Danish Tax Agency’s website.

old age reserve

The old-age reserve is a tax reserve that functions as a kind of own pension scheme. This is a reservation of part of the profit. The result is that you temporarily pay less tax. Later, however, you will have to pay income tax on your old age reserve. Or you have to buy annuity for it.

If you want to create an old-age reserve, Tax must consider you an entrepreneur, and you must meet the hourly criterion. You may also not have reached the state pension age at the start of the calendar year. At that time, any old age reserve will be canceled.

Before forming an old age reserve, it is wise to get advice on this. There are all kinds of hooks and eyes for this event. For example, it is possible that you pay income tax on the reserved amount faster than expected. For example, when you close down your business.

Have you already submitted your tax return and have you forgotten a deductible item? If a final assessment has not yet been required for this, you can fill in the tax return. You then still offer your data, now with the one deductible item. That way, you can still take advantage of a deduction.

Related reading:

• Entrepreneurship deduction
• The small business scheme looks like this
• Ceiling becomes business space: investment deduction or not?
• Are donations to charities commercially deductible for private limited companies?

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