SME- profit exemption
The SME-profit exemption is a fiscal facility for entrepreneurs that has been introduced in 2007. You can be considered for the SME-profit exemption if you qualify for the law on income tax as an entrepreneur.
The SME-profit exemption is a concession of 14% of the profit of an entrepreneur (2014). This concerns the profit that remains after the deduction of the entrepreneurial deduction (art.3.74 Law IB). Of the remaining profit (after entrepreneurial deduction) only 86% will be taxed as taxable profit. No taxes are paid over the remaining 14%. The purpose of the SME-profit exemption is to exempt a part (14%) of the profit from paying taxes. The higher your profit, the higher the amount over which you do not need to pay taxes.
An example:
Result after fiscal items €10.000
Entrepreneurial deduction -/-€7.280
=€2.720
Result after entrepreneurial deduction €2.720
SME-profit exemption (14*2.720) -/-€381
=€2.339
Taxable profit from enterprise: €2.339. The exemption from taxes is in this case €381,-. Over the €2.339 taxes will need to be paid.
Based on a result after fiscal items of €100.000,- the calculation is as follows:
Result after fiscal items €100.000,-
Entrepreneurial deduction -/-€7.280
=€92.720
Result after entrepreneurial deduction €92.720
SME-profit exemption (14*2.720) -/-€12.981
=€79.739
Taxable profit from enterprise: €79.339, the exemption that is obtained through the SME-profit exemption is in this case €12.981.
For more information or any other questions please do not hesitate to contact us at info [at] lupacompany.com.