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- An activity done through a sole proprietorship or company form other than limited companies is taxable if it is suitable for profitability over time.
- An activity that is not eligible to go with profit is seen as a hobby, which means that income is not taxable and costs are not deductible.
- The first year your business is considered taxable, you can get the previous 5 years approved as start-up years, with deduction of costs. Previous deficit can also be moved forward to this year. In that case, you will have to fill out the form RF-1298 (“Start-up of business”).
- If taxable activities are carried out, the rules are essentially similar to those that apply if you operate in a limited company, but it is important not to mix the company’s economy with your own economy.
- Net profit for one year (when revenue exceeds cost) is taxed by 23% (for 2018) as ordinary income, but also taxed as personal income with social security contributions (11.4% in 2018) and step tax (between 1.4 % to 15.4% in 2018, depending on total income).
- Net deficits for one year (when costs are greater than income) are first charged to other personal income in the current year, and on continued loss to deductions in revenue in recent years.
- Reporting is done through an income statement and other forms (depending on the type of business you are running), where individual numbers are transferred to the personal pre-filled tax report.
