The business activities of self-employed business owners are characterised by being of a commercial nature, carried out for the owner's own account and risk and with the aim of making a profit. Hobby businesses, however, are run in your spare time for recreation or pleasure.
Only if you are running a commercial business are you entitled to deduct losses and, for example, apply the favourable rules of the business tax scheme. However, if you run a hobby business, you can only deduct operating costs, depreciation and the like to the extent that these items can be paid for out of the annual income from the same business.
If your business has posted a loss for several years, SKAT will often want to establish whether you are, in fact, running a commercial business, or whether it is just a hobby for you.
An overall assessment is therefore made of whether or not your business qualifies as a commercial business, taking all relevant factors into account. The fact that you have posted a loss for a number of years is only one of the factors included in the assessment, and it is not decisive. It is also necessary to consider whether the loss is only temporary, whether you have the necessary qualifications to run the business, whether the operating methods are usual for this type of business, whether sales are of a certain size etc.
We have many years of experience handling appeals in this field. If SKAT decides that you are not running a commercial business, we recommend that you contact us with a view to obtaining an assessment of your case.