The Netherlands' famous red light districts and "coffee" shops contribute €2.5bn a year to the national economy, or slightly more than the country’s consumption of cheese, Dutch authorities said.
Official calculations made public under new European guidelines showed the industry accounted for about 0.4% of gross domestic product.
About half of the consumption is domestic, much of it in coffee shops and brothels, and the rest is from export, primarily of drugs, according to Statistics Netherlands.
"It’s slightly less than the total consumption of bread and probably a bit higher than the total consumption of cheese", said statistics office spokesman Peter Hein van Mulligen.
Countries across the region are implementing new European Union statistical rules – which among other things require estimates of the profits from prostitution and drug-dealing to be included in national accounts.
Britain's Office for National Statistics estimated last month that drugs and prostitution would add almost 1% to GDP and said the total changes would raise GDP by 4-5%.
France will not be adding either the illegal drugs trade or illegal prostitution to its calculation of gross domestic output because such transactions are not always based on mutual consent, its national statistics office said last week.