As a self-employed person, you can sometimes be extremely busy. Your partner may occasionally lend a hand. But what if your partner helps out in your business on a(n) (almost) full-time basis? What does the tax situation look like in that case, and what are the pros and cons?
If your partner helps out in the business on a continuous basis, you can make use of the ‘assisting spouse’ status. Despite the name of this status, you do not have to be married to qualify for it. A partner with whom you are legally cohabiting can also apply for it.
Who can apply?
The assisting spouse status is only available to partners of self-employed persons who earn profits and income (i.e. sole proprietors) and therefore not to partners of company directors (as is the case with corporations). This assisting spouse may also not have any other professional income. So if your spouse works elsewhere part-time, half-time or full-time, they are not eligible.
In addition, there can be barely 3,000 euros of personal income from a self-employed professional activity in order to be able to make use of the assisting spouse status.
Tax benefit?
The tax system allows 30% of the net income to be allocated as remuneration to the assisting spouse. This can even go up to 50% if both partners carry out the professional activity together and deliver equivalent performance. Think, for example, of a man who is a baker and his wife who sells the baked goods.
This remuneration is fully deductible as a professional expense for the self-employed person. Moreover, he does not even have to draw up a form for it. So it is relatively easy to apply. The deductibility of part of the income as a business expense ensures that the income is taxed at a lower rate. In addition, the assisting spouse will accrue their own social rights with the wage granted.
But… ?
Not everything is rosy. Despite the tax benefit and the relatively simple applicability, the assisting spouse will be considered a (nearly) full-fledged self-employed person. This means that individual advance payments and social security contributions will also have to be paid.
So, deductible expenses are granted to one partner, which is certainly interesting. But these are added as taxable income for the other partner. Yet, this system remains interesting because the tax burden on the assisting partner (the one who is granted extra income) is presumably lower. Precisely because they have no other income. Indeed, one of the conditions is that the assisting partner may not have a part-time, half-time or full-time job with an employer.
