Are you only selling your goods as a person via the internet or as a business?
For the Tax Authorities its is difficult, because of the rise of the Internet economy to determine whether someone is a hobbyist or an entrepreneur. This is mentioned in internal documents of the Expertise Enforcement (EHI) from the tax authorities.
A world without the internet
A world without the Internet is impossible to imagine in today's economy. This also has implications for the tax authorities in terms of tax and enforcement. Consumers are able more easily through the Internet to act on the market as a provider of goods and services. The transition from hobby to business also makes it easier. In practice, the tax authorities find it difficult to distinguish whether a person is a hobbyist or an entrepreneur . For example, when is a hobbyist who refurbishes and sells bicycles classified as an entrepreneur? If he refurbishes and sells some bikes, the Tax authorities notes this as amateurism, which no tax is levied. If this man however sells on regular basis , then this is regarded as entrepreneurship and the income taxed as income from business.
Good control is difficult for tax authorities
The complicated distinction between hobbyists and entrepreneurs will lead to enforcement problems with the tax authorities. For the tax authorities it is indeed not easy to control it properly. There is often a small business making implementation costs exceed revenues. EHI recommends in its document, to continuously monitor developments and provide information about tax obligations through the website of the Tax Administration.
Conditions for entrepreneurship
The Tax and employs some conditions in order to determine whether a person is an entrepreneur for income tax purposes. Like the following;
-The entrepreneur should aim for profit.
-He decides when and how he carries out his duties and has several clients and customers. ---He invests in his company
-He accepts entrepreneurial risk and take action to ensure that his company continues to exist.
For VAT purposes , a person will be much faster an entrepreneur;
- When a person provides goods or services, he must calculate in principle compulsory VAT.
The discussion is very actual at this moment in The Netherlands especially for people who rent out their home via Airbnb
When you are not sure wether you will be determined as a person or entrepreneur it is always wise to ask help from an expert.
Tax & Service Solutions is an expert when it comes to all your tax matters. check our website for more information.