Home SME profit exemption 2026: 12.7% of your profit tax-free

SME profit exemption 2026: 12.7% of your profit tax-free

Part of your profit is exempt from income tax: the SME profit exemption. In 2026 it is 12.7%. You do not need to apply.

12.7%Exemption in 2026

13.31%For comparison: 2024

No hoursHours criterion does not apply

Updated 29 October 2026 · Valorem Tax Advisory, tax adviser with an LL.M. in tax law

How it works

First deduct the entrepreneur’s allowance, such as the self-employed allowance. 12.7% of the remainder is exempt. Example: € 48,800 profit after the self-employed allowance gives a € 6,198 exemption, so you are taxed on € 42,602.

Who qualifies?

Anyone with business profit for income tax: sole traders and partners in a partnership. The hours criterion does not apply, which makes it useful if you run a business alongside a job. A BV (Dutch private limited company) does not qualify, nor do pure lenders or co-entitled persons.

With a loss too

If you make a loss, the exemption reduces the loss by 12.7%, which lowers the amount you can offset against other years.

The rate is falling

It was 13.31% in 2024 and has been 12.7% since 2025. Changes come through the annual Tax Plan.

Part of the bigger picture

The exemption is one of several items that determine your tax. We calculate the whole picture for you, from profit to assessment.

Calculator

What remains taxable after the entrepreneur’s allowance

Enter your profit for 2026. You see which allowances you get and on which part of your profit you pay tax.

Your profit for 2026 Profit for 2026 in eurosYour business profit in euros, before allowances. If you made a loss, put a minus in front.

Do you meet the hours criterion? YesAt least 1,225 hours a year on your business. If you are also employed, at least half of your working hours must also go to your business. That second test does not apply to starters. NoThen you get no self-employed allowance and no starter’s allowance. You do get the SME profit exemption.

Are you entitled to the starter’s allowance? No YesIn one or more of the previous five years you were not self-employed, and in those years you received the self-employed allowance no more than twice.

Your result for 2026

Profit

€ 50,000

Self-employed allowance

Amount for 2026

− € 1,200

Starter’s allowance

Not applicable

€ 0

SME profit exemption

12.7% of your profit after the entrepreneur’s allowance (€ 48,800)

− € 6,198

Taxable business profit€ 42,602

Have your tax calculated

This is an indication. The calculator uses the 2026 amounts and only the self-employed allowance and the starter’s allowance. It does not include other allowances, such as the allowance for a partner who works in the business (meewerkaftrek). If you had reached state pension age on 1 January, your self-employed allowance is halved. How much tax you pay on the taxable profit also depends on your other income. Read more about the self-employed allowance, the starter’s allowance, the hours criterion and how much tax you pay as a freelancer.

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How much tax will you pay?Self-employed allowance Income tax return All knowledge