A dentist develops a method to treat people with dental anxiety with horses. After six years and €278,000 in losses, the tax authorities refuse further deductions. The court confirms that without concrete acquisition plans and clients, there is no business. The dream remains a hobby.
From dental practice to equine method
Until 2017, the dentist ran a successful practice. She develops an innovative method using horses to treat dental anxiety. In 2015, she starts a separate sole proprietorship for this purpose. After selling the dental practice in 2017, she focuses entirely on the equine method. The numbers are dramatic. From 2017 to 2022, the business runs only at a loss. Turnover is minuscule: €589 in 2020, the year this case is about. The dentist keeps eight horses, four ponies, five donkeys and several dogs, but hardly treats any clients.
Tax authorities pull the plug
In March 2023, the inspector writes that he does not accept the activities as a source of income from 2020 onwards. Turnover is minimal, while costs are sky-high. A reasonable profit forecast is lacking. The 2020 loss may not be deducted. The dentist protests. She points to her business plan, opportunities for treatment sessions, training and licensing. The corona pandemic has thrown a spanner in the works. Moreover, any innovation follows the S-curve model: first lose, then grow.
Court: potential without plan is insufficient
The court finds that while the dentist has explained the revenue potential, it has not explained how it will realise it. No concrete acquisition plans are present. The trademark is registered, but that alone does not generate revenue. The book written in 2020 does not help either. The dentist does not substantiate how this will lead to more customers. Interest from the dental world remains vague. Concrete collaborations are not getting off the ground. The expected scenario with licence revenue and training turns out to be hot air.
Corona and S-curve fail to make it
The corona defence fails. Even after the pandemic, the results remain negative. In 2023, the loss is still €6,046. The S-curve theory (first losses in innovation, then growth) is not convincing either. Without concrete starting points for success, it remains wishful thinking. Keeping horses and other animals does not yet make a business. This may as well be private.