SME Profit Exemption
The SME profit exemption (MKB-winstvrijstelling) is a percentage-based exemption on the profit of income tax entrepreneurs. After subtracting entrepreneurial deductions (such as the self-employed and starter's deduction), 13.31% of the remaining profit is exempt from tax. The beauty of the SME profit exemption is that there are no conditions attached – you don't need to meet the hours criterion. Every entrepreneur who makes a profit under income tax qualifies. The higher your profit, the more you benefit from this exemption in absolute terms.
Example
After the self-employed deduction, your remaining profit is €42,000. The SME profit exemption is 13.31% × €42,000 = €5,590. Your taxable profit drops to €36,410. At 36.97% tax, this saves you €2,067.
Why does this matter?
The SME profit exemption applies automatically when you file as an entrepreneur. It's a significant benefit on top of the self-employed and starter's deductions. The more profit you make, the more you save – an extra reason to keep your business running well.