Freelance tax return: self-employed deduction and SME profit exemption explained

As a self-employed entrepreneur you pay income tax on your profit — but there are deductions that apply specifically to entrepreneurs and lower your taxable profit. The most important ones are the self-employed deduction (zelfstandigenaftrek) and the SME profit exemption (MKB-winstvrijstelling).

The hours criterion: the basic condition

To qualify for the self-employed deduction you must meet the hours criterion: you must spend at least 1,225 hours per year on your business. This works out to an average of roughly 24 hours per week.

Self-employed deduction (zelfstandigenaftrek)

The self-employed deduction is a fixed amount you may deduct from your profit before income tax is calculated. Note: this amount is being reduced annually by the government as part of a multi-year phase-out plan — always check the current amount at belastingdienst.nl.

SME profit exemption (MKB-winstvrijstelling)

After deducting the self-employed deduction (and any other entrepreneur deductions), you may exempt a percentage of the remaining profit from tax: the SME profit exemption. This percentage applies to all entrepreneurs, even if you do not meet the hours criterion.

Other common deductions

• Business expenses — office supplies, software, part of your workspace (under conditions), travel expenses
• Investment deduction (KIA) — for investments in business assets above a certain threshold amount
• Starters' deduction — an additional deduction on top of the self-employed deduction during your first years as an entrepreneur
• Pension accrual (retirement reserve or annuity) — tax-advantaged saving for later

Calculation example (indicative)

Suppose your profit before deductions is €50,000. After the self-employed deduction and SME profit exemption, your taxable profit can end up considerably lower — often 20-30% less than the gross profit. The exact outcome depends on the current percentages and your personal situation.

Want a quick estimate of your net income as a freelancer? Use our freelance income calculator. For a definitive calculation and optimal deduction strategy, we recommend consulting an accountant — find one via our directory.