An entrepreneur in the Netherlands that owns his one man company, can benefit from a number of tax benefits. Among these benefits are the entrepreneurs discount (zelfstandigenaftrek) and starting entrepreneurs (startersaftrek) discount. Currently the Dutch Government is discussing to abandon them, as it costs too much money. What do these discounts imply?
The entrepreneurs discount amounts to EUR 7.280 in 2013. That implies that the profit of the company is reduced with EUR 7.280 before the income tax is being calculated. This entrepreneurs discount applies when the entrepreneur works for at least about 1250 hours per year for the company and the majority of his income is generated through the one man company.
The starting entrepreneurs discount applies to entrepreneurs that meet the requirements of the entrepreneurs discount and who recently started their company. The EUR 7.280 is then increased with EUR 2.123. This is for a maximum period of three years.
The starting entrepreneurs discount also applies when the company was driven through a BV company, but the BV company has been terminated and the business is now done through a one man company. Although the company was not recently started, the registration was recently made, hence the discount is applicable.
The entrepreneurs discount reduced the profit with EUR 7.280, the starting discount reduced the profit with EUR 2.123. The profit that is left over after these discounts become subject to the SMI profit discount (MKB winstvrijstelling).
The SMI profit discount is not under discussion by the Dutch Government. The percentage is 14%. This is a substantial discount and basically results in the entrepreneur never paying the maximum 52% tax rate, as it is always reduced more or less with 14% of 52%.
The above mentioned discounts make a one man company more interesting from a tax perspective than the BV company. Moreover, the BV company has substantially more fiscal rules that need to be obeyed.