Tax return type B

What it means

The type B tax return is the personal income tax form for anyone who had other taxable income besides employment. That includes business income and income from liberal professions, rental income, capital income and other income, such as from selling property or shares.

The form has a section for each kind of income and adds the partial tax bases together. Employment income is reported in it as well, so type B also covers everything that would otherwise go into a type A return.

For business income the taxpayer chooses how to claim expenses: actual expenses from single-entry bookkeeping or tax records, or flat-rate expenses as a percentage of income up to a statutory cap. The choice makes a big difference to both tax and contributions.

How it works in practice

All sole traders file a type B return, even with a loss or no income, if they held a trade licence during the year. It is due by the end of March, with the option of a deferral, and the tax is payable by the same date.

The Social Insurance Agency and the health insurer take over the data from the return and use it to set contributions for the next period. The outcome therefore also determines whether a sole trader becomes compulsorily insured and what the monthly payments will be.

Where last year’s tax was higher, the taxpayer must pay tax advances in the following year. Together with the return we therefore give clients an overview of advances, contributions and deadlines so the payments do not come as a surprise.

What to watch out for

A common mistake is leaving out rental or sale income because the person does not see it as business. The Financial Administration receives data from banks, the land registry and platforms and will spot the gap. Exempt amounts and holding periods should be checked before filing, not after a request.

Where the trade made a loss, its carry-forward into later years under the current rules is worth considering. And the child tax credit for entrepreneurs is subject to a minimum income condition that should be checked before claiming it.