Discontinuation profit: what you settle when you stop

What is discontinuation profit?

Discontinuation profit is the gap between your book value and your real value. You settle that gap with the Belastingdienst in your final year of trading¹. It counts as part of your income for that year, so you pay income tax on it¹.

This page covers what you settle when you end, sell or transfer a business taxed in Box 1. You measure the gap at the moment of transfer or cessation¹. It names what counts towards the sum, the two reliefs that lower it and the routes that pass the tax on. It also names the annuity route that sets part of it aside. It does not cover a BV.

Take Katarina. She has run her own business in Utrecht for fourteen years. At the end of the year she moves back to Croatia. Her books value the business well below what a buyer will pay for it. That difference is her discontinuation profit. We work her final year out in full further down.

What counts as discontinuation profit?

Hidden reserves, released tax reserves, goodwill and anything you keep for yourself. The sum reaches well past the price a buyer pays, which is where most of the surprises sit. A machine or a business property you have written down for years is worth more than your balance sheet says¹. That difference is yours to settle. Tax reserves on that balance sheet fall free on the day you stop. They are added to your profit¹. Your oudedagsreserve, the old-age reserve you built up inside the business, falls free the same way, in whole or in part⁶.

One line surprises people. You also pay tax on stock and business assets that you give away or take into private use¹. Nothing has to be sold for the tax to arrive.

The table below sets out what goes into the sum.

How is discontinuation profit taxed?

You pay income tax on it in Box 1, in the year you stop. So what does that leave you paying? The whole amount is added to the profit for that year. So does anything the business still earned¹. The discontinuation relief comes off first². Then the mkb-winstvrijstelling, the SME profit exemption, works on what is left⁵. Your rate then follows from your total income that year. Our page about income tax for the self-employed sets out the brackets. One boundary matters before you start calculating.

What is the discontinuation relief worth?

The discontinuation relief takes up to €3,630 off your discontinuation profit. Two reliefs reduce that profit before you pay tax. The first is the stakingsaftrek, the Dutch term for the discontinuation relief. It equals your discontinuation profit, with €3,630 as a maximum³. You get the full amount once in your lifetime². An unused remainder stays available at a later cessation².

The second relief is broader. The mkb-winstvrijstelling leaves part of your profit untaxed. In 2026 that share is 12.7%, calculated after the entrepreneur deductions come off⁵. Its tax benefit has a cap in 2026: it lowers your tax by at most 37.56% of the amount it removes⁵. Our page about the self-employed deduction covers the rest of the entrepreneur deduction family.

Can you move the profit into an annuity?

Yes. You may put part of it into an annuity and deduct the premium. The relief above is small next to this second route. The Dutch call it a stakingslijfrente, an annuity funded from your discontinuation profit⁶. Transferring the business counts as stopping for this purpose⁶. How much extra room you get depends on your age and on the situation you stop in⁶.

The table below gives the maximum amounts for 2026⁴.

Those amounts are maximums rather than entitlements. What you may actually deduct also depends on the retirement provision you already hold. The premium also has to be paid inside a set window after the year you stop.

The route matters most when you have an oudedagsreserve. Stopping releases that reserve in whole or in part. The released amount counts as profit⁶. You may then reduce it by the annuity premiums you pay and deduct, so the addition and the deduction cancel out⁶. Tax arrives later, on the annuity payments themselves⁶. Our pages about the annuity and about the annuity premium deduction cover that side in full. Whether the route is worth taking is a calculation.

How does an €80,000 discontinuation profit work out?

Of €80,000 discontinuation profit, €66,671 stays in Katarina's Box 1 taxable profit. She sells the business and stops trading on the same day. For this example, her final year holds no other profit. She has never used the discontinuation relief before, so the full €3,630 is available to her. She claims no other entrepreneur deductions that year, so the exemption applies to the full €76,370. The table below runs through her year step by step.

The two reliefs together take €13,329 off an €80,000 settlement. What Katarina pays on the €66,671 follows from her other income that year.

She is 57, so the middle bracket of the annuity table applies to her. That bracket's maximum is €287,445, far above the €80,000 she is settling. What she may actually deduct still depends on the provision she has already built up. Moving abroad adds a further layer. Our page about tax on emigration covers it.

Can you pass the tax on instead?

Five situations let you pass the tax to whoever continues the business. What if you would rather not settle at all? Then the roll-over facility, the doorschuiffaciliteit, is the route to look at¹. It applies when you carry on in a new or existing business¹. It also applies on a divorce or the death of your partner¹. A transfer to a co-entrepreneur or an employee counts. So does a transfer into a BV¹. The fifth situation is your own death¹. Each of those has its own conditions¹.

One more rule buys you time rather than relief. Has the person continuing your business not paid the purchase price in full? Then a deferral scheme applies to the tax on your discontinuation profit¹.

What changes from 2027?

The discontinuation relief is expected to shrink sharply from 2027. Those 2026 figures hold for this year. The government has announced a cut of roughly three quarters, to around €908⁷. The relief is expected to disappear from 2030⁷. None of that is law yet.

What should you do in the year you stop?

Adjust your provisional assessment as soon as you know you are stopping. What does all of this mean for your own year? Do you have a provisional assessment for that year? The Belastingdienst based it on an earlier year's income¹, so it may no longer be right once the discontinuation profit arrives¹. Tell them about the higher income and they recalculate it, which keeps a large payment off your final assessment¹.

Three things are worth settling first. Work out what the business is really worth against what your books say, because that gap is the whole sum. Decide whether the annuity route fits your retirement plans. And review whether one of the roll-over situations applies to you, because that choice cannot be made afterwards.

Katarina walks out of her final year with a settlement she planned for rather than one she discovered. Stopping is not always a sale. A business can also close because it stopped working. The same rules decide what is left to settle. Knowing the number before you file is what turns it into a decision.

What we do for business owners is on our page about tax advice for entrepreneurs.