SME profit exemption (mkb-winstvrijstelling)
The SME profit exemption (mkb-winstvrijstelling) is a deduction from taxable profit for entrepreneurs in Dutch income tax. It is not an ordinary business expense in the commercial annual accounts of a BV.
What is the SME profit exemption?
The SME profit exemption (mkb-winstvrijstelling) is a deduction from taxable profit for entrepreneurs in Dutch income tax. It is not an ordinary business expense in the commercial annual accounts of a BV.
This deduction belongs to income tax for entrepreneurs and not to the corporate income tax of a BV. The applicable percentage differs per year. A commercial set of annual accounts does not contain this tax calculation as a regular business expense.
How does it work?
In 2025 and 2026 the SME profit exemption is 12,7% of the profit the taxpayer earns as an entrepreneur from one or more businesses, after that profit has been reduced by the entrepreneur's deductions (art. 3.79a Income Tax Act 2001 (Wet IB 2001)). It applies to the sole proprietorship (eenmanszaak) and to the partners of a general partnership (vof) or partnership (maatschap). It has no hours criterion, and it is applied automatically in the income tax return. Whoever earns profit only as a co-entitled person does not get it.
The tax benefit is limited: in 2026 it is calculated at a rate of 37,56%, even if the profit falls partly in the top bracket. In the case of a loss the scheme works in reverse: the loss is reduced by 12,7%, so there is less to offset.
Example
A self-employed person (zzp'er) with a sole proprietorship makes € 60.000 profit in 2026 and meets the hours criterion. Self-employed deduction: € 1.200. Profit after entrepreneur's deductions: € 58.800. SME profit exemption: 12,7% × 58.800 = € 7.467,60. Taxable profit from business: € 51.332,40. Without the hours criterion the self-employed deduction lapses and the exemption is 12,7% × 60.000 = € 7.620. With a loss of € 10.000 the scheme reduces that loss by € 1.270 to € 8.730.
In the annual accounts
Income tax return, not as a separate P&L item in the commercial BV annual accounts.
Difference from the self-employed deduction
The self-employed deduction is a fixed amount, € 1.200 in 2026, for which you must meet the hours criterion (art. 3.76 Income Tax Act 2001 (Wet IB 2001)). The SME profit exemption is a percentage of profit and has no such requirement. The self-employed deduction comes off the profit first; the exemption is calculated on what remains.
Common mistakes
- Applying the exemption to BV profit
- Reusing an old year's percentage
What to watch for
- Use the percentage of the tax year: 13,31% in 2024, 12,7% in 2025 and 2026.
- In the annual accounts of a sole proprietorship or vof, the exemption is not in the profit and loss account; it is a step in the return between profit and taxable profit.
- Size classes play no role: the exemption applies to every entrepreneur in income tax, regardless of turnover or balance sheet total, and never to a BV.
Legal basis and source
Income Tax Act 2001 (Wet inkomstenbelasting 2001), art. 3.79a
Frequently asked questions
Is my BV entitled to the SME profit exemption?
No. The exemption is in the Income Tax Act 2001 (Wet inkomstenbelasting 2001) and applies to natural persons who earn profit from a business. A BV pays corporate income tax.
Do I have to apply for the SME profit exemption?
No. The Dutch Tax Administration (Belastingdienst) takes it into account automatically in the income tax return as soon as you declare profit from a business.
Read more
Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
Get started