Does your partner work in your business, but receives no salary or only a small amount? If so, you might want to think about the cooperation deduction. This is a tax benefit for unpaid work of your tax partner. In this article, you will find out whether you are eligible for it, how to apply it and how it differs from a normal salary.
What is the cooperation deduction?
The cooperation deduction is a tax benefit for entrepreneurs whose partner regularly helps out in the business without receiving a full salary for it. If your partner meets the required conditions, you can deduct part of your profits from your taxable income. And the more your partner helps out, the bigger this deduction is.
For many sole traders or entrepreneurs who involve their partner in administration, customer contact or production, this is a convenient way to save tax.
Conditions for the cooperation deduction
As an entrepreneur, you may use the co-working deduction if you meet these conditions:
- You are an entrepreneur for income tax purposes and work a minimum of 1,225 hours per year.
- Your partner works a minimum of 525 hours per year in your business.
- You don't pay your partner more than €5,000 a year for cooperating.
- You can prove how many hours your partner contributed (e.g. via a timesheet).
But please note that this scheme only applies to tax partners.
How do you calculate the cooperation deduction?
How much you can deduct depends entirely on the number of hours your partner worked in a year. We explain it to you in the column below.
| Hours worked | Deduction rate |
| 525 – 875 | 1,25% |
| 875 – 1.225 | 2% |
| 1.225 – 1.750 | 3% |
| 1,750 or more | 4% |
Sample calculation
OK, suppose: you have a profit of €60,000 in one year. Your partner helps out throughout the year and works 1,300 hours. Since you don't pay a salary, you can deduct 3% from your profit as a co-working deduction. At the bottom of the line, this amounts to: €60,000 x 3% = €1,800 extra deduction.
Partner remuneration or work remuneration
But you can also choose to give your partner a real salary instead of the cooperation allowance. In that case, you pay your partner a labour remuneration for cooperating. You can deduct that remuneration as an expense from your profit.
Conditions of employment remuneration
That labour remuneration applies only if:
- this remuneration is at least €5,000 per year.
- your partner self-declares this income in Box 1.
- this is a business allowance appropriate to the type of work.
With employment benefits, as a business owner, you may deduct the wages from your profits, but your partner pays tax on this income. This can be advantageous if your partner has a low own income or if you prefer to process this deduction directly.
Example
Imagine this: you pay your partner €6,000 a year for help in the business. You deduct that amount from your profit, but your partner pays income tax on it. In this case, you can no longer use the co-working deduction. So good to know.
Conclusion
The co-working deduction is a simple and advantageous scheme for entrepreneurs who get help from their partner, without paying him or her a full salary. If you meet the conditions, it can save you as much as hundreds of euros in taxes.
Still, it is important to know carefully whether an employment bonus or the co-payment deduction is advantageous for you. Because what works best depends on the hours, income and how you work together.
