The reduction in the self-employment deduction and SME profit exemption in 2025: Is a limited liability company a smart move for the SME entrepreneur?

The self-employment deduction and the SME profit exemption have been additional income tax benefits for entrepreneurs for many years. But these deductions have been increasingly reduced in recent years. In 2025, the amount of the self-employment deduction drops to €2,470 and the SME profit exemption is reduced to 12.7%. It is expected that the self-employment deduction will be only € 900 in 2030. For many entrepreneurs, this raises the question: is it still fiscally advantageous to do business as a self-employed person or sole proprietorship, or is it time to consider switching to a B.V.?

Higher tax burden due to lower deductions In addition to the reduction in the self-employed deduction and the SME profit exemption, the general tax credit will also be reduced and the tax rate in the 2nd bracket will go up. As the profits from business increase, the tax burden will increase further, making entrepreneurship as a sole proprietorship or general partnership less attractive fiscally.

Is a B.V. a solution? For entrepreneurs with higher profits, a B.V. (limited liability company) can be an attractive alternative. Instead of income tax, in a B.V. you pay corporate income tax (Vpb), which in 2025 will be 19% for profits up to €200,000 and 25.8% for profits above that. This rate is significantly lower than the top income tax bracket, which rises to 49.5%.

In addition, as a director-major shareholder (dga) of a B.V., you have more flexibility in how you distribute income. You must pay yourself a minimum salary (the so-called “customary wage”), but you can have additional profits paid out as dividends, which are taxed at 31%, with the first €67,000 even taxed at 24.5%. In some cases, this is more advantageous than taxing all profits through income tax.

Advantages of a limited liability company Besides the possible tax benefits, there are other advantages to doing business in a B.V.:

• Limited liability: In a B.V., you are not personally liable for the company's debts. This provides additional protection, especially if you make large investments or run risks.
• Salary and dividend flexibility: To some extent, you can decide how much salary you receive and what profits you pay out as dividends. This provides opportunities to optimize your tax burden.

When does switching to a limited liability company make sense?
The reduction in the self-employment deduction and SME profit exemption may be a reason to consider switching to a limited liability company. However, whether it is the right choice for you as an entrepreneur depends on your specific situation, such as the size of your business, the risks you take, and your personal situation.

Conclusion Legislation is constantly changing. Therefore, it is important to regularly check with your advisor to see if you are still an entrepreneur in the right form. By properly anticipating these changes, you as an entrepreneur can continue to take full advantage of the tax benefits that are still available.