Trade licence

What it means

A trade is systematic business activity carried on independently, in one’s own name and at one’s own risk, under a trade authorisation.

Trades are free, craft or regulated. A craft trade requires qualification evidenced by education or experience; a regulated one a special statutory condition.

Not every independent earning activity is a trade. Liberal professions such as lawyers, doctors, auditors or tax advisers work under separate statutes, and their authorisation does not come from the trade office. An author’s income from copyright needs no trade licence either, although it is taxed much like business income.

How it works in practice

Both individuals and companies can notify one: a company uses it to extend its registered scope. It is filed electronically and arises on the date of notification once conditions are met.

An individual becomes a self-employed person with everything that follows: tax registration, contributions from the second year, income records or flat-rate expenses.

With a new sole trader we decide which trades to notify at once. Free trades combine fairly easily, whereas a craft trade needs proof of experience or training, or the appointment of a responsible representative. If a client stops trading for a while, during parental leave for instance, the trade can be suspended rather than cancelled.

What to watch out for

Carrying on activity without the matching authorisation is an offence and, in an audit, a reason to challenge the customer’s deduction. So the licence is added before the first invoice, not after.

Cancelling a trade is more than deregistering. When a business ends, the tax base is adjusted for unpaid receivables, payables and remaining stock, so the final tax return can show tax even in a year when the trader earned almost nothing. The end date is worth working out in advance.