A number of tax incentives, ranging from exemptions from premium payments to deductible expenses are available when running your business.
Discontinuation relief for closing your business
Any profit you make from closing your business is being taxed under the label stakingswinst (profit from discontinuity). A so-called discontinuation relief (stakingsaftrek) may apply to the closing of your business.
A maximum profit deduction is available as a relief to ensure that you pay less tax on this profit. Part of the profit arising from your business closure can be used to pay for annuities. An additional tax-free annuity helps you to lower the amount of tax you need to pay. The deductible amount depends on your age and the situation when you close your business.
Incentives for employing older or disabled workers
Incentives for employing workers who have difficulty finding employment are available for employers in the Netherlands. For persons over the age of 56 on unemployment benefits, people on incapacity benefit, or people who have occupational limitations employers can receive an annual compensation. This is called Loonkostenvoordeel (LKV).
Retirement reserve and annuity
As a business owner, you can build a retirement reserve by setting part of your profit aside every year. This would reduce your profit and thus the amount of tax you pay over it now. You can convert your retirement reserve into an annuity for which the premium is tax-deductible.
Small Business scheme (KOR)
If you run a small business with a total in sales of less than € 20,000 per year you can elect for the so-called Small Business Scheme (Kleine Ondernemersregeling or KOR). Under the KOR scheme, you do not need to charge VAT and you are not required to file your (quarterly) VAT with the Dutch tax office. A disadvantage, though, is that you cannot deduct VAT on business expenses and investments.
SME profit exemption
A business profit exemption for small businesses is available to lower your tax on profit. The exemption amounts to 14% of the profit for small businesses.
Tax relief for new companies
New businesses in the Netherlands are eligible for a tax relief called entrepreneur allowance (Startersaftrek and Ondernemersaftrek). Using this facility lowers the amount of tax that you otherwise would need to pay.