Calculating your profit: revenue minus deductible costs

Your profit is the foundation of your tax bill. It's not your invoices, it's what's left after you've paid for everything needed to run your business. This guide shows you how to calculate it, what counts as deductible, and walks through a real-world example.

The simple formula#

Profit = Revenue − Deductible business costs

Revenue is straightforward: the total amount your customers paid you for goods or services (even if they haven't paid yet — accrual basis). Deductible costs are expenses that were necessary for your business and weren't personal spending.

But the details matter, and that's what this post covers.

What counts as revenue?#

Revenue includes:

• Invoiced sales to customers (the total amount, before VAT)
• Services rendered (even if unpaid at year-end)
• Other business income (e.g., royalties, consulting fees, resale margin)

What it doesn't include:

• VAT you collected (that belongs to the tax office; you remit it quarterly)
• Loans you took (not income — you have to repay them)
• Investment returns (unless they're core to your business, e.g., rental income for a property manager)

Accrual vs cash: The Netherlands uses accrual accounting for tax. If you invoiced someone in December but they didn't pay until January, that invoice counts as 2025 revenue. The timing of cash arrival doesn't matter — invoice date does.

What counts as deductible business costs?#

The rule is simple: a cost is deductible if it was necessary for your business and wasn't personal spending.

Fully deductible costs (common examples)#

• Software and subscriptions (accounting, design, hosting, etc.)
• Office rent (if it's a dedicated business workspace)
• Equipment and tools (within the depreciation / small-asset rules)
• Travel for business (train, plane, mileage — but not the commute home)
• Training and professional development (courses, memberships, books)
• Insurance (professional liability, general liability — but not personal health insurance)
• Accounting and legal fees (accountant, tax advice, contract review)
• Bank fees (on your business account)
• Marketing (website, ads, social media content)

Partly deductible costs (mixed private/business)#

• Phone and internet: Only the business share. If you use your phone 70% for business and 30% personal, deduct 70%.
• Home office rent: Generally not deductible unless you have a separate, dedicated business entrance (rare for freelancers).
• Car expenses: If it's your personal car used partly for business, either:
  • Deduct actual business use (fuel, maintenance, insurance share), OR
  • Claim the mileage allowance (€0.23/km in 2025; €0.25/km in 2026) — often simpler.
• Meals: Partly deductible (roughly 80% or a fixed threshold), but keep receipts and notes on who and why.

Non-deductible costs (personal, not business)#

• Your own salary to yourself (you pay yourself from profit)
• Loan principal repayment (only interest is deductible)
• Personal living expenses (rent, groceries, personal clothing)
• VAT on non-deductible items (e.g., a private car)
• Fines and penalties (generally not deductible)

A worked example: from invoices to taxable profit#

Let's walk through a real freelancer's year:

Revenue (2025):

• Client A invoice (Mar): €8,000
• Client B invoice (May): €12,000
• Client C invoice (Nov, unpaid at year-end): €5,000
• Small side project: €2,000
• Total revenue: €27,000

(Paid or not, these are accrual-basis revenue.)

Costs (2025):

• Software subscriptions (Figma, Adobe, etc.): €1,200
• Laptop (bought May, €1,500): Depreciate over 5 years = €300/year (€200 in year 1 if mid-year buy)
• Office rent (shared space, business use): €3,000
• Phone/internet (30% business): €500
• Train travel to clients: €400
• Professional development (online course): €200
• Accountant fee: €800
• Bank fees: €50
• Total costs: €6,550

(Small items under €450 can usually be expensed immediately; larger assets are depreciated.)

Taxable profit: €27,000 − €6,550 = €20,450

Then your tax calculation applies:

• Minus zelfstandigenaftrek (2025): €2,470
• Minus startersaftrek (if eligible): €2,123
• Taxable after deductions: €15,857
• Minus MKB-winstvrijstelling (12.7%): ~€2,014
• Taxable income: ~€13,843
• Tax at brackets + credits = your final bill

This is why accurate, organised bookkeeping is so powerful: it directly shrinks your taxable income and your tax bill.

Timing and accrual accounting#

The Netherlands uses accrual accounting for tax:

• An invoice you issue in December counts as 2025 revenue, even if unpaid.
• A bill you receive in December counts as 2025 cost, even if unpaid.
• The invoice date (for sales) and receipt date (for costs) determine the tax year, not when cash changes hands.

This is different from cash-basis accounting (used in some countries), where only paid invoices count. Accrual is stricter but more accurate over time.

Depreciation: the 5-year rule (simplified)#

Equipment and assets over roughly €450 are usually depreciated (afgeschreven) over their useful life, typically 5 years, at a maximum of 20% per year. A laptop for €1,500:

• Year 1: 20% = €300
• Year 2: 20% = €300
• Year 3: 20% = €300
• Year 4: 20% = €300
• Year 5: 20% = €300
• Total: €1,500

Smaller items (under ~€450) can usually be expensed immediately in the year of purchase. Always keep invoices and receipts; the Belastingdienst may ask for a depreciation schedule if audited.

Common mistakes that increase your taxable profit#

1. Forgetting to deduct costs you actually paid. Review your bank statements line-by-line. Easy to miss a software renewal or a conference fee.
2. Deducting personal costs. A €2,000 holiday is not a business trip, even if you did some work while there. Only the business portion counts.
3. Miscalculating mixed costs. If you bought a computer for 60% work and 40% personal gaming, only deduct 60%.
4. Ignoring timing. A December invoice counts as this year, even if unpaid. A January payment for a December cost counts as this year.
5. Not keeping receipts. If audited and you can't prove a cost, it won't be deductible.

Tools and templates#

Many accountants or bookkeeping software (like ZZP Belasting) can build a depreciation schedule, track accrual revenue, and calculate profit automatically. But even a spreadsheet works if you're organised. The key is: capture every cost as it happens, categorise it (software, rent, travel, etc.), and review at year-end.

Frequently asked questions#

Profit is the bedrock of your tax bill. The higher your deductible costs, the lower your taxable profit, and the lower your tax. This is why meticulous record-keeping pays off — every forgotten receipt is money left on the table. ZZP Belasting automatically tracks your invoices and expenses, calculates your profit, and shows you exactly what you'll owe.

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