Self-employment deduction 2025: Tax break and conditions

What is the self-employment deduction?

The self-employed deduction is a tax scheme specifically designed for entrepreneurs. If you meet the conditions, you can annually deduct a fixed amount from your profit before paying tax. As a result, your taxable income will be lower, meaning you will ultimately pay less income tax. The idea behind the scheme is that entrepreneurs run more risk than employees: you have no sick pay, no pension scheme and less security. The self-employed deduction partly compensates for this and can give you hundreds to thousands of euros of benefit every year.

How high is the self-employment deduction?

In 2025, the self-employed deduction is €2,470. If you meet the hour criterion and the other conditions, you may deduct this amount from your profit before paying tax. Your taxable income will be lower as a result, which means you will pay less tax at the end of the day. Exactly how big the benefit is depends on your profit and the tax bracket you fall into, but it can amount to hundreds of euros per year.

Phasing out: will the self-employed deduction disappear?

The self-employed deduction will be phased out over the next few years. In 2024, the deduction was still €3,750, while in 2025 it was already reduced to €2,470. According to the Tax Plan, the amount decreases further to eventually €900 in 2027. The aim of this is to narrow the tax gap between employees and the self-employed. For you as an entrepreneur, this means that the it will be less and less beneficial and that it will become important to make the most of other deductions.

Unrealised self-employed deduction

It may happen that your profits in a year are too low to use the full self-employed deduction. In that case, you do not lose the benefit: you can carry the remaining part forward to a subsequent year. This is called the unrealised self-employed deduction. As soon as your profit is high enough, you can still set off this amount and still benefit from the tax advantage.

Terms

You are not automatically entitled to the self-employed deduction. The tax authorities look at several conditions, including:

• You must be an entrepreneur for income tax purposes. The Inland Revenue assesses this based on, among other things:
• How many clients you have,
• Whether you are at entrepreneurial risk,
• And whether you work independently.
• You must meet the hours criterion: Spending a minimum of 1,225 hours per calendar year on your business.
• You must not have reached the state pension age yet: Are you eligible for AOW in a year? Then you will still get only half of the self-employed deduction.

These rules ensure that the deduction only applies to entrepreneurs who run their businesses seriously and actively.

You can test this yourself with the entrepreneur check from the tax authorities.

How often can you use it?

You can apply the self-employed deduction every year as long as you meet the conditions. So there is no maximum number of times. However, the amount of the deduction will continue to decrease in the coming years, reducing the benefit.

Hours criterion self-employed deduction

The hours criterion is the key to becoming entitled to the self-employed deduction. You must have at least Devoting 1,225 hours per calendar year to your business. Not only paid hours count here, but also things like administration, travel time, marketing and training. If you cannot prove this, you are no longer entitled to the self-employed deduction. It is therefore important that you keep careful records of your hours that you can show when audited.

Applying self-employment deduction

You apply the self-employed deduction in your annual income tax return. You enter your turnover and costs there, after which the profit is automatically reduced by the self-employed deduction and any other deductions. The amount that then remains is your taxable income and you pay tax on it. So you see the advantage immediately: the more deductions you can use, the less tax you pay. It is wise to already take this into account during the year. That way, you will have a better idea of what you have to pay to the tax authorities and will not be faced with any nasty surprises when filing your tax return.