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.
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 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.
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