An entrepreneur cannot deduct an amount from his profits for work he has carried out himself.
That makes sense
That makes sense, you might think. After all, one of the aims of income tax is to tax income earned through work. Nevertheless, an artist argues that he was right to deduct over €7,000 in sales costs from his profit. This amount consists of the artist’s estimate of the number of hours spent on the business, multiplied by an hourly rate of €65.
Arnhem-Leeuwarden Court of Appeal It naturally begins with the observation that the burden of proof lies with the artist to demonstrate that the costs were incurred for the benefit of the business. However, he cannot provide such proof because “remuneration” for work carried out by an entrepreneur himself does not constitute a “cost” of the business. After all, no expenditure is actually incurred in respect of these costs.
For example, costs relating to work carried out by volunteers free of charge cannot be deducted either. Only an organisation serving the public good or social interest (ANBI or SBBI), which derives its profits primarily through the work of volunteers, may deduct the notional costs of the volunteers’ labour from its profits subject to corporation tax.