Calculating cessation profit and using the cessation relief
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
Cessation profit is the difference between the real value and the book value of everything in your business, plus released reserves; against it you may apply the one-off cessation relief of € 3,630, after which the 12.70 per cent SME profit exemption still applies.
- You settle up even without a sale: assets you keep yourself move to private use at market value.
- The cessation relief never exceeds your cessation profit and applies in principle once in your lifetime.
- If you received investment relief in the past five years, disinvestments above € 2,900 trigger an addition to your profit.
- In your final year you usually no longer meet the 1,225-hour criterion, so do not count on the self-employed deduction.
Ceasing to trade is not a quiet exit for tax purposes. In your final year the tax authorities want to settle up over everything of value in your business that has never passed through your profit: the surplus value of your assets, the goodwill you built up and reserves on your balance sheet. That is called cessation profit, and it comes on top of your ordinary profit for the year. It can add up to a sizeable assessment, but two favourable rules apply as well. This article walks through calculating your cessation profit, what the cessation relief and the SME profit exemption take off it and which items are most often forgotten.
What counts as cessation profit?
Cessation profit is the difference between the real value of everything in your business and the book value shown in your records. So you settle up over hidden value: a van still worth € 9,000 while it sits on the balance sheet at € 3,000, a client base a successor pays for, or stock you sell at a profit. On top of that, reserves you formed in earlier years are released in one go.
Whether you sell or simply close the door makes little difference to the calculation. In a sale the contract tells you the value. If you stop without selling and keep the assets yourself, you transfer them to private use at market value: the price a stranger would pay. More on that in transferring an asset to private use.
| Item | How you determine the value |
|---|---|
| Assets (van, tools, fixtures) | market value minus book value |
| Goodwill | only if a buyer pays for it, see [selling your business](kb:eenmanszaak-verkopen-goodwill) |
| Stock | proceeds on clearance, or value when taken into private use |
| Reinvestment reserve | released in full, see [the reinvestment reserve](kb:herinvesteringsreserve-bedrijfsmiddel) |
| Debtors and work in progress | hours still to invoice belong to the final year, see [work in progress](kb:onderhanden-werk-waarderen) |
| Business premises or workspace on the balance sheet | surplus value compared with the book value |
The cessation relief and the SME profit exemption
You may deduct the cessation relief of € 3,630 from your cessation profit. The relief applies per business, never exceeds the cessation profit itself and can in principle be used once in your lifetime. If you later cease another business, the amount you used earlier has already been spent.
After that the SME profit exemption of 12.70 per cent applies to the whole amount. The self-employed deduction is often out of reach in the final year, because you no longer meet the 1,225-hour criterion if you stop halfway through the year. So do not count on it, unless you worked full tilt in the opening months.
Settling up for a sole trader who ceases
- Ordinary profit up to the cessation date
- € 18,000
- Van taken into private use
- value € 9,000, book value € 3,000, so € 6,000 of profit
- Tools and fixtures
- value € 2,500, book value € 1,000, so € 1,500 of profit
- Cessation profit
- € 7,500, less the € 3,630 relief, leaves € 3,870
- Total profit in the final year
- € 18,000 plus € 3,870 is € 21,870, from which 12.70 per cent SME exemption is deducted
Result: Roughly € 19,093 remains taxable. Without the cessation relief that would have been over € 3,100 more, which at a combined rate of about 36 per cent saves some € 1,100 in tax.
Two items often forgotten: disinvestment and VAT
If you received investment relief in the past five years on assets you now sell or take into private use, the disinvestment addition comes into play. Above € 2,900 of disinvestments in a year you add back the same percentage you deducted at the time, calculated over the sale price or the transfer value. It feels like an extra charge, but it is simply the mirror image of the relief you received earlier.
Then there is VAT. Taking assets into private use counts as a supply to yourself, so you pay 21 per cent on the value, provided you deducted the VAT on purchase. If you sell assets to someone else, you invoice with VAT. You then file one final return and notify the tax authorities and the chamber of commerce that you are stopping. The practical steps are in stopping or pausing as a freelancer.
What to record and when to get help
The whole settlement stands or falls with the values you use. So record for each asset how you arrived at the value: an advert for a comparable van, a dealer's valuation, or the buyer's invoice. Draw up a closing balance sheet as at the cessation date, because the return builds on it. You simply file one income tax return for the whole year, with the cessation processed in it.
With a large cessation profit, for example from goodwill or premises, there are ways to spread the tax or roll it over to a successor. Those schemes have strict conditions and deadlines, so get advice before you sign the sale contract. If you transfer to family, also read transferring your business to your child. If you plan to keep doing the odd job, consider pausing instead of ceasing: then you do not have to settle up now.
Finally, do not forget the aftermath. Invoices arriving after the cessation date for work done before it still belong to the business, as do costs you incur afterwards to wind things up. You keep your records for seven more years, even though the business no longer exists; see the record-keeping obligation.
- Determine the cessation date and draw up a closing balance sheet as at that date.
- Value each asset, your stock and any goodwill, and keep the supporting evidence.
- Release your reserves and check the disinvestment addition for the past five years.
- File the final VAT return, including VAT on assets moving to private use.
- Apply the cessation relief in your income tax return and set money aside for the assessment.
Frequently asked questions
Do I owe tax on cessation profit if I sell nothing?
Yes. If you keep the assets yourself, you settle up over their market value at the moment they move into private use. Only if the book value equals or exceeds that value is there nothing left to tax.
How often can I use the cessation relief?
In principle once in your lifetime, up to the maximum of € 3,630. If you used part of it earlier, the difference remains. The relief never exceeds the cessation profit itself.
Do I still get the self-employed deduction in my final year?
Only if you still meet the 1,225-hour criterion that year. If you stop in spring, that is rarely feasible. You do get the SME profit exemption, including over your cessation profit.
Can I postpone settling up?
There are schemes to roll the charge over to a successor or spread it, but they set strict requirements on form and timing. Discuss that with your bookkeeper before you sign anything or deregister the business.
Sources
- Cessation relief 2026Belastingdienst · belastingdienst.nl
- Disinvestment additionBelastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
