If you file Dutch income tax as an entrepreneur, you will run into a deduction that lowers your taxable profit without you having to ask for it: the SME profit exemption, or mkb-winstvrijstelling. Unlike the self-employed deduction, it does not depend on how many hours you put into your business, which makes it one of the more quietly important numbers on a Dutch tax return.
The SME profit exemption at a glance
| Question | Answer |
|---|---|
| Rate in 2026 | 12.7% of your profit after entrepreneur deductions |
| Who gets it | Every entrepreneur for income tax purposes, even without meeting the hours criterion |
| Do you apply for it? | No, the tax authority and your filing software apply it automatically |
| Does it apply to losses too? | Yes, your carry-forward loss is reduced by the same percentage |
How it lowers your taxable profit
The exemption is not calculated on your revenue, and not on your full profit either. It applies to your profit after the entrepreneur deduction (ondernemersaftrek) has already been subtracted, meaning the self-employed deduction and, if you qualify, the starter deduction come off first. Whatever is left after that gets a 12.7% tax-free slice. The rate was 13.31% in 2024, dropped to 12.7% in 2025, and stays there for 2026.
What makes this deduction different is that it does not require the 1,225-hour criterion that applies to the self-employed deduction. If you work too few hours on your business to qualify for that deduction, you can still claim the SME profit exemption, as long as the Belastingdienst recognises you as an entrepreneur for income tax purposes at all.
Worked example: €40,000 profit
Say you make €40,000 in profit in 2026 and meet the hours criterion, so you also qualify for the self-employed deduction.
- Profit: €40,000
- Self-employed deduction: €1,200
- Profit after entrepreneur deduction: €38,800
- SME profit exemption (12.7% of €38,800): €4,927.60
- Taxable profit: €38,800 - €4,927.60 = €33,872.40
Without the exemption, you would pay tax on the full €38,800. Thanks to the exemption, almost €5,000 falls outside the tax base, which works out to roughly €1,760 less tax at the 2026 first-bracket rate of 35.75%.
What if you do not qualify for the self-employed deduction?
Say you work on your business part time alongside a regular job, and do not meet the 1,225-hour criterion. You will miss out on the self-employed deduction, but the SME profit exemption still applies in full. On €15,000 profit without the self-employed deduction, the exemption is 12.7% of €15,000, or €1,905, bringing taxable profit down to €13,095. That gap, getting the exemption regardless of hours worked while the self-employed deduction depends entirely on meeting the criterion, is where new entrepreneurs often miss out when filing on their own.
Frequently asked questions
Do I need to apply for the SME profit exemption myself? No. As soon as you report business profit as an entrepreneur for income tax purposes, the Belastingdienst, and almost every filing tool, calculates the exemption automatically on your profit after entrepreneur deductions.
Could the rate change for 2027? Possibly, though current signals point to the rate staying stable. We track that in our article on where the SME profit exemption stands for 2027.
Does the exemption still apply if my business makes a loss? Yes. The exemption works in both directions: if you make a loss, the amount you can carry forward and offset against future profit is reduced by the same percentage.
Can I combine it with other deductions, like the investment deduction? Yes. The SME profit exemption is applied last, after every other deduction and the entrepreneur deduction have already come off your profit.
Running a business in the Netherlands as an expat
New to the Dutch tax system and trying to work out which deductions actually apply to you? At Sophy &Co. we advise expat founders from before incorporation onward, not only once the paperwork is already filed, and can put you in touch with trusted banks, lawyers and notaries from our network along the way.
We're a woman-led team with both female and male bookkeepers, proudly LGBTQIA-friendly, and we work across English, Dutch, Italian, Chinese, Spanish, Papiamento, German, and a bit of French and Polish, so you can talk through your numbers in the language you're most comfortable in.
Curious what your own deductions add up to? Book a call and we'll walk through it with you. Take a look at our services and pricing to see how it works.
Want the official source? Check the Belastingdienst's page on the mkb-winstvrijstelling and the entrepreneur deduction, or see the Chamber of Commerce for more on running a business in the Netherlands.