You have become self-employed. The income is being received in your bank account. But that is not the end of the story. This income must also be correctly declared in your tax return. The tax return refers to ‘profits’ and ‘benefits’, but what do those terms mean?
What do profits mean?
Profits are income from industry, trade, or agriculture. This applies mainly to self-employed persons who sell products or provide physical services. Examples include contractors, bakers, and shopkeepers. Profits are usually linked to direct, physical labor and tangible products or services. This is income that comes from activities in which you actively create or deliver something.
What are benefits?
Benefits are income from liberal professions and civil service. These are often intellectual or advisory services provided by self-employed persons such as doctors, psychologists, nurses, dieticians, accountants, translators and interpreters, artists, photographers, but also, for example, cyclists. Benefits are usually based on mental effort and expertise, without a directly tangible product being associated with it.
What is the difference between profits and benefits?
The difference between profits and benefits has direct consequences for your tax return.
For example, as a profit-maker, you are taxable as soon as you issue and send an invoice, even if you have not yet received payment. In the case of benefits, you are only taxable once you have received the income.
How much is the lump sum expense deduction for benefits? The lump sum expense deduction for self-employed persons obtaining benefits is the same as for employees, i.e. 30% of the profit, with a
maximum of 5,750 euros for the 2025 tax year. With profits, you have a more generous lump sum expense deduction than with benefits.
FAQ about profits and benefits
What is the main difference between profits and benefits?
Profits are the result of physical labor, while benefits originate in intellectual or advisory professions.
What are liberal professions?
Liberal professions are intellectual professions, which always generate benefits. Here is a list of liberal professions: ·
- Pharmacist
- Artist
- Company auditor
- Sworn translator
- Tax consultant
- Dietician
- Doctor
- Occupational therapist
- Bailiff
- Journalist
- Physiotherapist
- Surveyor
- Speech therapist
- Musician
- Notary
- Psychologist
- Dentist
- Nurse
- Midwife
Are benefits the same as turnover?
No, benefits refer to net income after deducting costs, while turnover consists of all income.
Can you combine profits and benefits?
In theory, it is possible to have both profits and benefits, for example if you combine multiple activities. Think of a photographer who provides photography services and also sells cameras.
Conclusion
The difference between profits and benefits is important for correct administration and tax returns as a self-employed person. Dexxter offers you easy tools for invoicing, cost management, and tax preparation so that you can keep your administration in perfect order.
