Self-employed tax deductions

Quick overview: key self-employed deductions

Are you an entrepreneur for the Dutch Tax Administration?

You can only use self-employed deductions if you are considered an entrepreneur for income tax purposes. The Tax Administration looks at several characteristics, such as profit expectation, entrepreneurial risk, number of clients and independence. For many schemes, the hours criterion also applies: you work at least 1,225 hours per calendar year on your business. This also includes indirect hours, such as travel time, acquisition, administration and product development. If you were pregnant, a number of weeks still count.

Not sure? Assess your situation with the entrepreneur check and record your hours consistently. Good time tracking is often decisive for deductions such as the self-employed deduction and start-up deduction.

Deductible business expenses and depreciation

Deductible expenses for the self-employed are all expenses you incur for your business that can be substantiated as business-related. Think of software, marketing, tools, insurance and training directly related to your work. Private elements are not deductible, or only the business portion. In practice, business assets costing less than €450 (excluding VAT) may be expensed immediately; assets from €450 must be capitalised and depreciated.

Record receipts and invoices and link payments. The sum of smaller costs often saves hundreds of euros in income tax per year.

Self-employed deduction

The self-employed deduction is a fixed deduction from your profit if you are an entrepreneur for income tax purposes and meet the hours criterion. The amount is set by law and determined annually. The deduction directly reduces your taxable profit, so you pay less income tax. Note that additional conditions may apply and the amount has been adjusted in recent years. An up-to-date bookkeeper for the self-employed ensures you make the most of the available room.

Start-up deduction

If you are a starting self-employed professional, you can apply the start-up deduction on top of the self-employed deduction. Conditions include meeting the hours criterion, having made no or limited use of entrepreneurs' deductions in previous years, and applying the scheme a maximum of three times within five years. If you start from employment or grow from a hobby, make sure you have solid substantiation of your entrepreneurial status and hours.

Note the variant for disability: if you meet the conditions for a disability benefit, adjusted hours requirements and amounts apply. Seek advice in time, as the application differs from the regular start-up deduction.

SME profit exemption

The SME profit exemption is an income tax exemption for every entrepreneur who makes profit from business activities. The exemption is a fixed percentage and is calculated on the profit after you have first applied all other entrepreneurs' deductions, such as the self-employed deduction and investment allowance. Even if you have a loss, the exemption can affect the final tax burden. You do not need to apply for the exemption separately, but a correct profit calculation is crucial for proper application.

Co-working partner deduction

If your fiscal partner structurally helps in your business without market-based remuneration, you may be able to apply the co-working partner deduction. The amount depends on your profit and the number of co-working hours in a calendar year, with tiers from a minimum number of hours. It is important that you can substantiate the co-working hours and that no or only limited remuneration is paid. If you do pay remuneration, other rules apply (for example the co-working remuneration) and in many cases the co-working deduction lapses.

Investment allowances for the self-employed

Small-scale investment allowance (KIA)

If you invest in business assets, the KIA can provide extra benefit on top of regular depreciation. You qualify if your total investments in a year exceed a legal threshold and the asset meets the conditions (durable use in your business and not an excluded asset). The deduction is a percentage or fixed amount depending on the total investment in that year. This includes, for example, machines, equipment, computers, fixtures and professional tools. Do not split large purchases unnecessarily and pay attention to the date of obligations and payments, as these often determine the year in which you are entitled to the deduction.

Energy investment allowance (EIA), Environmental investment allowance (MIA) and Vamil

If you invest in energy-efficient or environmentally friendly business assets, you may apply a higher deduction percentage via EIA or MIA. A condition is that the asset is on the current Energy List or Environment List and that you notify RVO in time. With Vamil you can also depreciate faster and more flexibly, improving your liquidity. Think of efficient installations, electrical equipment or circular business assets. Check the current lists and notification deadlines for each investment, because a late notification often means missing the tax benefit.

Arbitrary depreciation for start-ups

Starting entrepreneurs may, in certain cases, depreciate new business assets arbitrarily. This allows you to bring forward a larger portion of costs into a high-profit year, reducing income tax and improving cash flow. Not all assets qualify and maximum limits and terms apply. Create a depreciation plan in advance so you can align the deduction optimally with your profit expectations.

Travel expenses and car: business or private

If you drive a company car, car costs are in principle deductible, but you must take into account an additional taxable benefit (bijtelling) if you also use the car privately above a limited number of private kilometres. If you use your private car for business trips, you may charge a business mileage allowance to your profit and some incidental costs are deductible. For public transport, taxi, car sharing or e-bike, business trips are deductible with tickets or a complete trip log. Choose the option that fits your usage: many business kilometres and relatively little private use often argue for a company car, while occasional business driving with a private car is fiscally simpler.

Workspace and home office

Costs of a home workspace are only deductible if the space qualifies as an independent workspace. This generally means a separate entrance and sanitary facilities and that the space, by normal standards, does not belong to the dwelling. If you meet these conditions, a proportional part of rent, energy and furnishings is deductible, for example. If you work from a non-qualifying space, such as the dining table or guest room, only specific business furnishings and equipment are deductible. If you rent an external office or workspace, those costs are fully business-deductible. Review your situation annually, as small changes can have major tax consequences.

VAT and deductions

Reclaiming VAT on business expenses

If you are liable for VAT, you may deduct the VAT paid on business expenses in your VAT return. This directly reduces the VAT due. Note the distinction between fully, partially and non-deductible VAT, for example in cases of mixed use or business gifts. Ensure you have VAT invoices and proper bookkeeping, otherwise the deduction is lost.

Small business scheme (KOR)

If your turnover falls below a legal threshold, you can opt for the KOR. You then do not charge VAT and do not file periodic VAT returns, but you also may not reclaim VAT on costs. The choice applies for at least a fixed period and is company-wide. The KOR can be advantageous with many private customers and limited costs with VAT. If you work mainly for business customers or invest substantially, VAT deduction is often more valuable than participating in the KOR.

Cessation deduction when stopping

If you stop (part of) your business or transfer it, cessation profit arises. The cessation deduction reduces that profit up to a legal maximum. This benefit can be substantial, especially combined with retirement provisions or with income averaging and timing of income. Carefully document the cessation date, the value of business assets and any goodwill. In case of partial cessation or contribution into another legal form, additional rules apply; seek advice in time to avoid unnecessary taxation.

Offsetting losses

If you incur a loss, you can offset it against profits from other years under legal rules for carryforward and carryback loss relief. As a result, you pay less income tax over the total period. Monitor the timing and order of your deductions, as some choices affect the utilisation of losses. A tight year-end close and timely filing prevent losses from expiring. Adjust mid-year? Include your deductions in your provisional assessment 2026 for entrepreneurs.

WBSO and R&D (S&O) deduction

If you work on technically new development, the WBSO can reduce wage costs and hours for R&D. For entrepreneurs under income tax, there is an additional R&D (S&O) deduction if you perform at least a statutory number of R&D hours and have an R&D declaration from RVO. Apply in advance and on time. Combine WBSO with investment allowances for maximum impact if you also invest in R&D assets.

Personal deductions and income provisions

No, these are not entrepreneurs' deductions, but they do reduce your taxable income. Think of specific medical expenses that meet the conditions and of payments for income provisions, such as premiums for disability insurance or annuities. The rules and caps differ per category. Include them in your overall tax planning so you don't miss anything.

Checklist: often forgotten deductions

• Software subscriptions, cloud storage and licences that run monthly

• Mileage log for business trips with a private car

• Costs of professional literature, professional associations and relevant courses

• Small hardware and peripherals below the depreciation threshold

• Processing foreign VAT on invoices and services correctly

• Phone and internet: only include the business portion

• Small business gifts and representation within tax limits

• Bank and transaction fees, payment providers and exchange rate costs

Frequently asked questions about self-employed deductions

How much tax do you pay on €50,000 as a self-employed person?

That depends on your profit after deductions and exemptions, the applicable tax bands and your tax credits. First subtract all business expenses and entrepreneurs' deductions from your turnover, then apply the SME profit exemption. You pay income tax on the remaining taxable profit according to the current bands. A trial calculation in your bookkeeping software or with help from your bookkeeper gives a reliable amount for your situation.

Which expenses are fully deductible for the self-employed?

Expenses that you incur exclusively for business purposes and that are reasonable are in principle fully deductible. Examples include software, tools, marketing, professional training, office rent, business insurance and professional services such as bookkeeping. For mixed use (phone, internet, car), you deduct only the business portion.

Which deductions are often forgotten?

Small ongoing subscriptions, bank fees, professional associations, business miles with a private car, professional literature and foreign VAT are often overlooked. The KIA on multiple smaller investments in one year and the co-working partner deduction in case of your partner's structural help are also often missed.

How can I pay as little tax as possible as a self-employed person?

Record hours and trips carefully, plan investments strategically for KIA or EIA/MIA, use the start-up and self-employed deductions, choose consciously between private or company car, and review your workspace annually. A periodic tax scan prevents deductions from being missed and helps with optimal timing.

Need help with your self-employed deductions?

Profinancials takes care of your complete bookkeeping and tax returns and ensures you use all deductions for the self-employed. Especially for sole proprietors and freelancers in the Eindhoven region. Want to consult a tax advisor in Eindhoven? You’re in the right place.

• Posting receipts and invoices

• VAT and income tax returns

• Personal business advice and unlimited contact

• Cross-checking your payment flows

Book personal tax advice for a one-on-one session about your deductions. Discuss your situation without obligation and immediately discover where you can save tax.