How your deductions stack: a worked example

Every freelancer sees the same question on their tax return: how does your business profit turn into the income tax you actually owe? The answer lies in understanding the order in which the big deductions apply. Get them in the wrong sequence, and you leave money on the table. Walk through one real example, and the whole system clicks.

The order matters#

Here's the critical fact: the sequence of deductions is fixed by Dutch tax law. You apply them in a specific order, each one reducing the amount that the next one applies to. Skip a step or get the order wrong, and you'll miscount your tax bill.

The order is:

1. Start with your gross profit (revenue minus business costs)
2. Subtract the zelfstandigenaftrek (if you qualify)
3. Subtract the startersaftrek (if applicable in your first five years)
4. Subtract the MKB profit exemption (12.7% of what's left)
5. The remainder is your taxable profit
6. Apply the income tax rate to get your tax due
7. Apply credits (heffingskorting, arbeidskorting) to lower the final bill

Each deduction builds on what came before — it's a cascade. Understand that cascade, and you can see where the biggest savings are.

The worked example#

Let's walk through Fiona, a freelance consultant in her first year of business. Here's her 2025 situation:

Now let's build her tax bill step by step.

Step 1: Calculate gross profit#

Fiona invoiced €85,000 and spent €25,000 on legitimate business costs (software subscriptions, client travel, co-working space — all documented and deductible).

Gross profit = €85,000 − €25,000 = €60,000

This is the starting point for all deductions.

Step 2: Apply the zelfstandigenaftrek#

Fiona worked 1,300 hours on her business in 2025, so she qualifies for the zelfstandigenaftrek.

In 2025, the zelfstandigenaftrek is €2,470.

Profit after zelfstandigenaftrek = €60,000 − €2,470 = €57,530

This deduction exists to acknowledge the hidden costs of self-employment (health insurance, pension contributions, etc.) that an employee wouldn't face.

Step 3: Apply the startersaftrek#

Fiona is in her first year of self-employment, so she qualifies for the extra startersaftrek.

The startersaftrek is €2,123 (she can claim it in a maximum of 3 of her first 5 years; taking it in year 1 is smart).

Profit after startersaftrek = €57,530 − €2,123 = €55,407

The startersaftrek only applies to people in their first five years of business, and only in up to three of those years. Fiona is using one of her three allowed claims right here.

Step 4: Apply the MKB profit exemption#

Now comes the MKB-winstvrijstelling — a deduction of 12.7% of the profit after the entrepreneur deductions.

This isn't applied to the original €60,000 — it's applied to the €55,407 figure after zelfstandigenaftrek and startersaftrek.

MKB exemption = €55,407 × 12.7% = €7,036

Profit after MKB exemption = €55,407 − €7,036 = €48,371

The MKB exemption is automatic — you don't apply for it, it just happens. And it applies to this reduced figure, not the original profit.

Step 5: Calculate taxable profit#

After all deductions, Fiona's taxable profit is €48,371.

This is the amount on which the income tax rate (box 1) is applied.

Step 6: Apply income tax#

Dutch income tax is progressive — you pay different rates on different slices of income. For 2025 (hedge these rates; they change yearly):

• Roughly 36% on the first €38,000
• Roughly 37% on income €38,000–€76,000
• Roughly 49.5% on income above €76,000

Fiona's €48,371 falls into the first two brackets. A rough calculation:

• First €38,000 × 36% = €13,680
• Remaining €10,371 × 37% = €3,837
• Subtotal tax: €17,517

(This is approximate; the exact brackets and rates vary year to year. For precision, check belastingdienst.nl or use a tax calculator.)

Step 7: Apply tax credits#

Fiona is entitled to tax credits that reduce her final bill:

• Algemene heffingskorting (general tax credit): roughly €3,200 (2025)
• Arbeidskorting (earnings credit): roughly €1,500 (2025, for earned income)

Combined credits: ~€4,700

Final tax due = €17,517 − €4,700 = €12,817

If Fiona receives a voorlopige aanslag (provisional tax assessment), she'll pay this in monthly instalments (roughly €1,068/month), or she can pay in one lump sum.

The summary#

What if Fiona had no qualifying deductions?#

For comparison, imagine Fiona had made the same €60,000 profit but didn't meet the urencriterium and wasn't a starter. She'd lose both the zelfstandigenaftrek and startersaftrek.

Without deductions: taxable profit = €55,300 (only the MKB exemption: €60,000 − €7,620).

Tax on €55,300 ≈ €19,400 (before credits).

Difference: €1,583 in extra tax — just from losing the zelfstandigenaftrek and startersaftrek. This shows why meeting the urencriterium matters so much.

The order in your head#

To lock this in, remember the phrase:

"Profit, then zelfstandigenaftrek, then startersaftrek, then MKB, then tax."

Or as a formula:

Taxable profit = 
( (Revenue − Costs) − Zelfstandigenaftrek − Startersaftrek ) 
× (1 − 12.7%)

That formula captures the whole cascade. The MKB exemption applies after the other deductions (that's why it's a multiplier, not a subtraction).

A note on variations#

This example assumes:

• Fiona meets the urencriterium (she logged 1,300 hours)
• She's a sole proprietor (eenmanszaak), not a BV
• She's a starter in her first year (so startersaftrek applies)
• No loss-carry-forward from prior years
• No special circumstances (AOV, special exemptions, etc.)

The order always applies, but other factors (losses, certain deductions, different business forms) may shift the numbers. The key is understanding the cascade: each deduction depends on the previous one's result.

Frequently asked questions#

The deduction stack is the engine of Dutch self-employed tax relief. Understand the order — profit, zelfstandigenaftrek, startersaftrek, MKB exemption, tax — and you'll grasp exactly where the government is helping you. Use ZZP Belasting to track every element of your calculation, so when you file your annual return, the numbers are already stacked correctly.

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