The business taxation scheme

The business taxation scheme is a tax model you can use if you are self-employed under certain conditions.

A self-employed individual operates a personally owned business at their own risk and expense. This may take the form of a full-time business with fixed premises and opening hours, part-time activity, or, for example, the letting of a small property.

In essence, the business taxation scheme allows for a greater deduction of business-related interest expenses than other tax models. Additionally, it permits the deferral of profits at a lower tax rate for later withdrawal and final taxation. This provides opportunities to build capital, acquire assets, or maintain inventory using funds taxed at a lower rate. For many, it also offers a means to structure their finances to avoid paying the top marginal tax rate.

The scheme is not entirely straightforward to use. At PrivatRevision, we work extensively with the business taxation scheme. We have substantial experience from tax cases involving the scheme, and our team has authored several academic publications and articles on the business taxation scheme.