BTW en Administratie

SME Profit Exemption 2026: 12.7% of Profit Untaxed

Updated: 11 August 2026 Netherlands 2026 English

Sole traders and partners in a partnership get a structural discount on their taxable profit: the SME profit exemption (MKB-winstvrijstelling) removes 12.7% of profit from the tax base — automatically, every year.

Short answer

The SME profit exemption is an automatic Dutch tax discount for personal-income entrepreneurs (sole traders and partnerships): 12.7% of profit is simply removed from your taxable income — you apply nothing for it. It works like a rate cut: the effective top rate drops from 49.5% to about 43.2%. Stacked with the self-employed deduction (€1,200 in 2026) it keeps the sole-trader form attractive at modest profits — and it is one side of the calculation when you weigh switching to a BV.

The rule in plain words

Take your business profit, subtract the entrepreneur deductions (such as the zelfstandigenaftrek), and then 12.7% of what remains simply stays untaxed. Zero conditions, zero hour thresholds, zero application — the return applies it by itself.

A worked example

Profit €80,000, minus €1,200 zelfstandigenaftrek leaves €78,800; the exemption removes 12.7% (€10,008), so €68,792 enters box 1. At the marginal rates that saves several thousand euros a year — a structural part of why the sole-trader form stays attractive at moderate profits.

The flip side

The exemption works on the profit in both directions: in a loss year it reduces the deductible loss by the same percentage. And it belongs to income-tax entrepreneurs only — a BV (besloten vennootschap, the Dutch private limited company) knows corporate tax and its own regimes instead.

Where it sits in the BV question

The exemption is one of the sole trader’s structural advantages the BV has to beat. The full comparison across profit levels stands in BV versus sole proprietorship; the tipping-point arithmetic in the box system explainer.

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Part of Doing Business in the Netherlands — the complete 2026 guide.

Frequently Asked Questions

Do I need to meet the hours criterion for the exemption? +

The exemption itself applies free of any hours test. The hours criterion matters for the entrepreneur deductions that come before it, like the zelfstandigenaftrek.

Sources Belastingdienst — btw · KVK Last updated: 11 August 2026