How to Calculate Your Company’s Taxable Income in Four Steps

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Your company’s taxable income is not the same as its accounting profit. It forms the basis for calculating corporate income tax (IS) or personal income tax (IR). Here’s how to determine your taxable result in four clear steps.

1. Calculate the Accounting Profit

Start by calculating your accounting profit at the end of your financial year, based on standard accounting principles. This figure reflects the company’s total revenue before tax, minus all operating expenses.

Accounting profit = revenues – expenses

If revenues exceed expenses, the company reports a profit. If not, it registers a loss.

2. Make Extra-Accounting Add-Backs (Reintegrations)

To convert your accounting profit into taxable income, you must adjust it by adding back certain expenses that are not tax-deductible. Common examples include:

  • Fines and penalties

  • The owner’s remuneration in a sole proprietorship

  • Corporate income tax itself

  • Company car tax (TVS)

  • Excess depreciation on passenger vehicles

These adjustments ensure that only eligible expenses reduce your taxable income.

3. Apply Extra-Accounting Deductions

Next, deduct any non-taxable income or previously taxed items from your accounting profit. These deductions typically include:

  • Income recorded in your accounts but not subject to taxation (either permanently or temporarily)

  • Previously taxed income (e.g., provisions reversed from prior years)

Generally, business expenses are deducted based on their actual cost. However, certain expenses—such as vehicle-related costs—can sometimes be deducted on a flat-rate basis. Specific professions may also benefit from simplified deduction regimes.

Learn more about deductible business expenses

4. Determine Your Taxable Income

Once the reintegrations and deductions are made, apply the following formula to determine your final taxable income:

Taxable income = accounting profit + non-deductible expenses – non-taxable income

This figure is then used as the basis for calculating your company’s tax liability, either under corporate tax (IS) or personal income tax (IR), depending on your business’s legal structure.