As a general rule, incorporating a company becomes worthwhile when:
your annual profit as a self-employed individual exceeds €50,000
you don't need all your income to cover your living expenses
you want to optimise your compensation.
There is no universal threshold, however: it all depends on your family situation, your income and your plans. What matters most is that there is still taxable profit left in the company after your compensation.
How do you calculate the taxable profit of a company?
The formula is simple:
Revenue − Professional expenses − Compensation = Taxable profit
This is the amount that is taxed under corporate income tax (CIT), which is lower than personal income tax (PIT). If you withdraw everything as compensation, no profit remains in the company, and incorporating brings no tax advantage.
👉 We cover the criteria in detail and provide examples in our comprehensive guide: When to incorporate: the right reasons to take the plunge
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