Harry starts his own painting firm after being away from the painting industry for several years. He is quick to register for VAT and to purchase a commercial van and paint brushes. He is taken on as part of a turnkey contract and hires an assistant and an apprentice. Harry has not prepared budgets, but there is plenty of work and he makes good money.

Our assessment

As the business is profitable and Harry has incurred a financial risk by investing in a commercial van and hiring staff, his painting firm, for tax purposes, is considered a commercial business. Our assessment ignores the fact that Harry has not prepared budgets, partly because the firm generates a profit and partly because the lack of budgets is outweighed by the risk incurred by hiring staff.

Peter runs a small farm of 7 hectares. It is a cattle farm producing beef. Peter also has a full-time job, but has taken an agricultural exam. The farm generates a modest profit.

Our assessment

Peter operates a commercial business. Based on a technical/agricultural assessment, the business operations are considered customary and responsible and Peter aims to make a profit.

David owns and runs a hunting and fishing shop with four employees. He has been contacted by the local evening school, which wants him to teach students seeking a hunting licence. He will have to teach one or two groups of students. Each group is expected to need eight to ten evenings of instruction in order to qualify for a hunting license, which comprises a practical and theoretical test. David is paid DKK 1,250 per evening class. David has to prepare teaching materials, whereas advertising and teaching facilities will be provided by the evening school.

Our assessment

David is taxed as self-employed on the income he derives from his hunting and fishing shop, as he runs this business at his own risk.

The income from the evening classes represents salary/wages for David. He receives a fixed fee per evening class, irrespective of the number of students. David does not incur a financial risk because he receives a fixed fee. Furthermore, David has no operating expenses exceeding what is considered normal for an employee.

 

Please see our legal guide (in Danish) for further legal information.