A consultant finishes a strong quarter and leaves the receipts in the business account. Part covers VAT and income tax. Some protects against late-paying clients. Another portion may fund an office or a new car. The rest simply feels reassuring.
That choice is not careless. Yet one bank balance can perform several jobs in the owner’s mind while the accounts explain none of them.
A Rechtbank Den Haag judgment dated 24 April 2026 brings the problem into focus. In ECLI:NL:RBDHA:2026:11616, the court examined the 2020 tax position of a consultancy sole proprietorship.
The business held €451,050 in bank and savings balances. The court accepted €165,000 as working capital. It treated €286,051 as durably surplus liquidity and placed that amount in box 3.
The lesson is not that tax rules punish careful saving. A sole proprietor may build reserves. The practical question is whether the amount still belongs to the business that exists, at the time under review.
Prudence needs numbers
Dutch tax treatment allows cash for current expenses, expected investment, business risks, reserves, and strengthening the enterprise. The amount must remain reasonable in light of the nature and scale of the business.
Cash becomes durably surplus when the business does not need it for operations, future investment, or absorbing business risks. It then moves from business assets to private assets and box 3.
A building contractor, retailer, and independent consultant will not need the same reserve. Even two consultants may face very different pressures. One may have monthly retainers from ten clients. Another may depend on two large projects and wait sixty days for payment.
Their bank balances carry different business logic. The useful question is not whether a reserve feels prudent. Ask what the money must cover, when that need may arise, and why the retained amount fits the enterprise.
That is where emotional security and a business reserve can drift apart. The feeling of caution is understandable. Tax classification follows the commercial purpose of the cash at the relevant date.
A future plan must belong to the present
The entrepreneur in the 2026 case referred to plans for office space. The court found those plans insufficiently concrete for 2020, particularly in light of the consultancy’s limited turnover and scale.
Much of the supporting material came from later years. The proposed investment had not proceeded. A later plan may be commercially sensible, but it does not give an earlier bank balance a business function by itself.
A plan gains weight when it leaves traces. Those traces may include a budget, property correspondence, supplier quotations, financing discussions, or a dated decision to invest. A signed contract is not required for every plan. The business does need enough substance to explain why a specific sum remained inside the enterprise.
The earlier accounting treatment also mattered. At the end of 2017, surplus cash had been transferred from business assets through a private withdrawal. The court held that this position continued into later years, including 2020.
A balance-sheet decision can travel further than the year in which it first appears. For the consultant looking at a reassuring balance, that changes the conversation. “I may need it” is a starting thought. It is not yet a cash policy.
Give the balance visible parts
Business cash becomes easier to manage when it has visible layers. One covers ordinary operations. Another covers known tax liabilities. A third supports identified investments. A fourth covers measurable business risks.
This is not a statutory format. It is a practical control method for testing whether the total balance has a coherent business function.
A twelve-month cash forecast can make those layers visible. VAT and income tax should not disappear into one general reserve. Planned equipment should connect with a replacement schedule or quotation. A risk buffer should relate to a concrete exposure, such as client concentration, seasonal revenue, professional liability, or replacing essential equipment.
The discipline improves management as well as tax positioning. A bank account showing €200,000 may suggest ample freedom. Once tax, committed spending, and a justified risk reserve are separated, the genuinely available amount may be much smaller.
The reverse can happen too. An undefined reserve may exceed what the business needs, even when the owner has never thought of it as private wealth.
The fiscale oudedagsreserve needs particular care in current discussions. In the historic facts of this case, €95,000 linked to the FOR formed part of the accepted working-capital amount. New additions to the FOR stopped in 2023.
Existing balances remain subject to rules on reduction and release. The FOR is now a legacy item, not a fresh basis for accumulating new business cash.
Classification comes before calculation
Once cash belongs in box 3, the applicable calculation follows. For the 2025 income-tax return, taxpayers may report actual return. The Belastingdienst compares that result with the fictitious-return calculation and applies the more favourable outcome.
That development concerns a later step. First comes classification: does the cash belong to the enterprise or to private assets? Actual-return reporting does not replace that earlier decision.
Owners can focus on the tax calculation while overlooking the weaker point in the annual accounts. Often, the decisive moment came earlier, when cash stayed in the business without a clear allocation.
The same judgment carried a second record-keeping lesson. The entrepreneur did not establish compliance with the hours criterion, so the zelfstandigenaftrek was refused. The normal threshold is 1,225 hours in the calendar year.
Administration, quotations, and website work can count alongside client work. The claimed time must still remain plausible when matched with calendars, invoices, correspondence, and delivered work.
Cash records and time records may seem unrelated. In a small business, they express the same discipline: the tax return should be reconstructable from the way the company was actually run.
Tomorrow morning, the consultant does not need a complicated new system. Start by naming the purpose of each material part of the balance. Connect planned spending with current records. Compare the reserve with turnover, costs, tax liabilities, and identifiable risks.
Give the hours record the same attention before year-end, rather than during a later dispute. A strong bank balance can reflect patience and sound judgment. It can also contain private wealth that has outgrown its business explanation.
The distinction is made by the job the money can credibly be shown to perform.
Want your cash reserve, records, and tax position reviewed before you file?
The data, sourcing, and analysis behind this article were conducted by Linda Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan before publication.
References
- Correctie box 3-vermogen wegens overtollige liquiditeiten in eenmanszaak - Taxence
- Rechtspraak - The submitted court judgment: surplus cash and carry-through from an earlier year
- Belastingdienst - Official classification rule for durably surplus cash
- Rechtspraak - Judicial test: freedom to build reserves has limits
- Belastingdienst - Hours records and the zelfstandigenaftrek
- Belastingdienst - The fiscal old-age reserve is now a legacy balance-sheet item
- Belastingdienst - Current box 3 consequences once cash is outside the business
- Belastingdienst - Box 3 access and processing for older years
