S&O Taxpayers (Self-Employed or ZZP) are individuals who independently conduct research and development (R&D) activities. To qualify as an S&O Taxpayer, an individual must meet the following requirements:
Application Process: Self-employed individuals must prepare a detailed description of their R&D activities, including the technical challenges involved and the potential innovations. This is submitted to RVO for approval, and an S&O declaration is issued if the application is successful. It is crucial to submit the application before starting the R&D project to be eligible. Writing a detailed application with the right wording is crucial to ensure eligibility. Traqqie can help you draft your application in a form that is likely to be accepted by RVO. Click here to start your application.
Tax Benefits: Upon receiving the S&O declaration, self-employed individuals can deduct part of their income related to R&D activities from their taxable income. The tax deduction applies to the number of hours spent on eligible R&D projects, making it easier for freelancers to invest in innovation without facing high tax burdens.
Compliance and Documentation: Self-employed individuals must keep accurate records of the time spent on R&D activities. It is advisable to use time-tracking tools and retain all documentation related to the project in case of an audit by the tax authorities.
Common Pitfalls: One common mistake is underestimating the time commitment required to qualify for WBSO. Ensure that at least 500 hours annually are dedicated to R&D activities, as failing to meet this criterion can disqualify an individual from receiving WBSO benefits. Additionally, only technical or scientific research that pushes the boundaries of knowledge qualifies for the subsidy, so routine work may not be eligible.
An independent software developer, Alex, is recognized as an entrepreneur for income tax purposes. Alex spends over 600 hours annually developing a new AI-based application and has obtained an S&O declaration from RVO. Alex qualifies as an S&O Taxpayer because all criteria are met.
Jordan, a freelance graphic designer, spends around 200 hours a year on improving design skills and working on client projects. These activities do not meet the hour criterion or involve significant R&D, so Jordan does not qualify as an S&O Taxpayer.