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Deductions
Your partner works in your business: deduction, salary or partnership?
Written by Ilias4 min read
In many sole proprietorships the partner quietly helps out: sending quotes, keeping the books, preparing orders. Often unpaid, with no tax treatment at all. A waste, because the law offers three routes that can all save tax: the working-partner deduction, a labour reward or joint entrepreneurship. Which fits best depends on your partner's hours and both your incomes.
Route 1: the working-partner deduction
If your fiscal partner works at least 525 hours a year unpaid (or for a reward below 5,000 euros), and you meet the hours criterion, you may apply the working-partner deduction. You deduct a percentage of your profit, rising from 1.25 percent at 525 hours to 4 percent at 1,750 hours or more. Your partner pays nothing on this. It is the simplest route: no payroll, just solid time records for your partner as evidence.
Route 2: a labour reward
If you pay your partner a realistic reward of 5,000 euros or more per year, it is fully deductible from your profit. Your partner declares the amount as income. If your partner has little or no other income, it falls into a low bracket and their tax credits are used, while you deduct at your higher rate. Especially with a substantially contributing partner without their own income, this route often beats the deduction. Do record the arrangement and the hours in writing.
Route 3: joint entrepreneurship
If your partner is a full participant in the business, consider a general partnership. You then split the profit according to an agreed ratio, and if you both meet the hours criterion, you are both entitled to the self-employed deduction and the SME profit exemption. That can save thousands of euros. It does come with more baggage: a partnership contract, joint liability and a profit split that can be justified commercially. Have this step calculated before you take it.
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
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