Dear Sir/Madam,
I have a question about expenses incurred as a self-employed person in a secondary occupation who is not subject to VAT.
I receive yearly about 600-700€ back from the taxes.
Will all the expenses I incur in my secondary occupation simply be refunded on top of that €600-700? Or how does this work?
Taxes are calculated on the difference between income and expenses, but I don’t have any?
Thanks for your help, because I don’t really understand this.
It is a common misconception that expenses are "refunded." In reality, expenses reduce your taxable income, which means you pay less tax.
Here's how it works for a self-employed person in a secondary occupation (exempted from VAT):
1. Expenses are a deduction, not a refund
If you incur a business expense of €100, you will not get that €100 back from the taxes. What does happen is this:
Your income from your secondary occupation is added to your salary as an employee.
Your expenses are deducted from that total income.
You only pay taxes on the remaining amount (your net profit).
The effect: You get a percentage of your expenses "back" in the form of a lower tax bill. Depending on your tax bracket, this is usually between 25% and 50% of the invoice amount.
2. What if you have no income?
If you incur costs in a year (e.g., the purchase of a laptop or software) but have no income from your secondary occupation, you will incur a tax loss.
This loss is deducted from your income from your main occupation.
This reduces your total taxable income.
Because your employer has already deducted withholding tax (tax) from your wages as if you had not incurred those expenses, you have overpaid.
Result: You will indeed receive more than the usual €600-€700, because your loss has reduced your taxable salary as an employee.
You really should try it out for yourself. Even if you don’t have a company number yet, you can already go ahead.
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