Sondring mellem erhvervs- og hobbyvirksomhed

Tommy Nielsen

Student thesis: Diploma thesis


The graduation project is the distinction between business activity and hobby activity, as seen from the taxpayer’s point of view. The target group is new or potential business owners and semi professional advisors. It might be difficult for a business to know how or when a business is classified as business with hobby activities. There is a connection between theory and jurisprudence, but anyway the jurisprudence has another way to assess the classification, which makes it difficult to comprehend. In the analysis business and business with hobby activities are defined in a way so the reader can see the differences. In general, in order to be classified as a business, it has to run at their own expense and risk, and there must be profit motive. Beyond these conditions, there are numerous other requirements. If these requirements are not met it is expected that the business are run as anything but a business. The jurisprudence use different tools such as profitability and intensity, to asses if there is a possibility for the business to be run with hobby activities. The profitability is assessed to make sure that there is a reasonable profit on the invested capital. This has to be equal to the risk-free market rate of interest that would be achieved besides the business. Intensity is assessed to secure the bottom-line result. If the business does not have the realistic intensity, the business may no longer be run as a general business. In addition to these tools, the jurisprudence uses a visual valuer, especially when assessing agriculture. In this context, the assessments use other criteria than by other businesses. It is not possible to determine if there are specific industries or business activities which can be characterized as hobby business. Although it can be said, that some industries and business activities are more exposed than others. Similarly, it is not possible to give a timeframe on how long a business start up phase can last, until the authorities make a proper assessment of each case. To facilitate the process of assessing hobby businesses, the tax authorities could make some points, just as generally businesses has, which could identify hobby businesses in a more orderly manner than the one we know today.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2011
Number of pages62