What is the SME profit exemption?
The SME profit exemption (mkb-winstvrijstelling) is a tax deduction to your profit. It reduces the amount of your taxable profit. Because of this you will have to pay less income taxes. The exemption amounts to 14% of the profit.
You first reduce your profit with the entrepreneur’s allowance (ondernemersaftrek). Then you deduct your 14% SME profit exemption.
SME profit exemption when loss-making
If your company suffers losses, the SME profit exemption diminishes your tax loss. In that case the SME profit exemption can have an negative impact on your company.
When are you eligible?
You are eligible if the Dutch Tax and Customs Administrations (Belastingdienst) considers you an entrepreneur for income tax purposes. Your income must fall under profit from business. If you are not sure you can use the Dutch-language assessment tool OndernemersCheck to find out. You do not have to meet the hours criterion of 1,225 hours per (calendar) year.
How to apply?
You do not have to apply for the SME profit exemption. The Dutch Tax and Customs Administration will automatically deduct the SME profit exemption from your tax return.