Your partner works in your business: deduction, salary or partnership?
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
If your tax partner works at least 525 hours a year without a reward of € 5,000 or more, you deduct 1.25 to 4 per cent of your profit, depending on the hours.
- The scale runs from 1.25 per cent at 525 to 875 hours, through 2 and 3 per cent, to 4 per cent from 1,750 hours.
- You must meet the 1,225-hour criterion yourself and be able to show both sets of time records.
- Pay your partner € 5,000 or more and the deduction lapses; you then deduct that reward as a business cost instead.
- The government intends to cut the deduction sharply from 2027, but that is not yet fixed in law.
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. If your children help out, different rules apply; see having your children work in your business.
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.
The percentages and the conditions
The partner deduction is a percentage of your profit, and that percentage depends on how many hours your partner works. More hours, higher percentage.
- Your partner works at least 525 hours a year in your business.
- You yourself meet the hours criterion of 1,225 hours.
- You pay your partner less than 5,000 euros a year. Pay more and the deduction lapses; you then deduct that payment as a cost instead.
- You must be able to show both time records. Without substantiation the deduction does not survive an audit.
| Your partner's hours per year | Deduction |
|---|---|
| Fewer than 525 | No deduction |
| 525 to 875 | 1.25% |
| 875 to 1,225 | 2% |
| 1,225 to 1,750 | 3% |
| 1,750 or more | 4% |
Worked example: € 70,000 profit, partner works 900 hours
- Your partner's hours
- 900, so 2%
- Partner deduction
- € 1,400
- Tax saving at around 37%
- around € 520
Result: Your partner pays no tax on this, since no payment was made. From 2027 the deduction is expected to be reduced substantially
Frequently asked questions
How much is the partner deduction in 2026?
Between 1.25 and 4 per cent of your profit, depending on how many hours your partner works. Below 525 hours there is no deduction; from 1,750 hours it is 4 per cent.
Must I pay my partner for the deduction?
No, quite the opposite. The deduction applies when your partner helps without real payment. If you pay more than 5,000 euros a year, the deduction lapses and you book that payment as a cost.
Which hours count for my partner?
All hours your partner genuinely puts into your business: administration, client contact, purchasing, coming along to jobs. Record them just like your own, with date and description.
Is the deduction better than employing my partner?
With few hours and modest profit usually yes, since no payroll administration is involved. If your partner works a lot structurally, real employment or a partnership can work out better. Have both variants calculated.
Is the partner deduction being abolished?
The government plans to cut the deduction by 75 per cent from 2027 and phase it out thereafter. That is not yet fixed in law, but do not count on this benefit remaining.
Can I combine it with the self-employed deduction?
Yes. If you meet the hours criterion, both apply. The partner deduction comes on top of the self-employed deduction and lowers your profit further.
Sources
- Partner deduction 2026: hours table and percentagesBelastingdienst · belastingdienst.nl
- Self-employed deduction 2026 and the hours criterionBelastingdienst · belastingdienst.nl
Sources checked on
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.
