Vat
Requirements
In general, all your company expenses are deductible from your (taxable) income. This means that all your company expenses, will reduce the taxable amount of your business. In the second Cessna judgment (HR 8 March 2002, 36292, BNB 2002/210), however, the Supreme Court has ruled that costs are not deductible if the utility is in such a disproportion to the size of those costs that no reasonably thinking entrepreneur can maintain that these costs with a view to business interests of the company are created.
Typical travel expenses are therefore deductible. However, if you decide to charter a boeing 747 to visit a client, a large part of this expense would not be deductible.
Mixed costs are costs incurred for business reasons and would therefore be deductible. However, due to the fact that expenditure can also be recognized as a private spending element, the legislator has designed a comprehensive and detailed regime for mixed costs. The objective of this is to eliminate the private spending element that can normally be deducted under the regular profit determination rules (see from the profit. Companies are not allowed to deduct mixed costs up to an amount of € 4,600 from the profit. Or 0.4% of the total wage bill, whichever is higher. Companies can also opt for an alternative scheme here, but companies may deduct only 73.5% of the mixed costs from the VPB as standard.
Value Added Tax - Tax Deductions
Aside from corporate taxation, there are certain restrictions in place concerning tax deductions in Value Added Tax.
Below you will find a list of expenses, you can see whether certain expenses are deductible or not. The list is not exhaustive.
100% Deductible as Business Expenses
Office
Rent of an (external) office
Rent and decoration of an independent part of the private residence (only if the independent part has its own entrance and facilities like a toilet etc. and you earn at least 70% of your income from this place
Depreciation and purchase of office furniture, equipment and inventory
Printing (writing paper, envelopes, business cards etc.)
Supplies (tonier, ink cartridges)
Postage
Cleaning costs
ICT
Subscription for telephone and internet in the office (if you work from home these will be personal expenses)
Mobile phone and PDA
Costs of business phone calls
Depreciation and maintenance costs of computer, laptop, scanner, printer etc.
Digital camera
Recording equipment
Data carriers (CD, memory card, USB stick)
Business software
Transport, travel and accommodation
Depreciation, maintenance, insurance, fuel, parking, road tax etc. concerning a company car (most of the times leading to a correction for the private use in the income tax return)
Tickets for train, taxi, bus, plane etc.
Costs of a company bike
Tax-free kilometre allowance for business use of a personal car (€ 0.19 per km)
Hotel
Car rent
Marketing
Website (development, hosting)
Advertisement (ads, Google AdWords, yellow pages etc.)
Support
Accountant, advisor, administrator
Membership of professional and trade organisations
Services of other companies/freelancers
Insurances
Company car
Inventory
Liability
Knowledge and development
Business literature (book, magazines, online library)
Training and courses
Professional Instruments and materials
Work clothes
Instruments and materials
Partially deductible
Costs of lunch, dinner etc. with business relations
Gifts and other representation costs
Study trips and conference attendance
Can you reclaim the VAT of a business lunch?
Normally you can reclaim the VAT on business purchases as input tax. In the case of business lunches (food & drinks), the regulations are somewhat more complicated.
There are two situations:
Lunch at the office
Do you get lunch in a catering establishment or supermarket and do you use this lunch at the office? Then you may reclaim the VAT in full from the Tax Authorities.
Lunch outside the office
Do you have lunch and are you useful in a catering establishment or do you let a caterer provide lunch in a specially equipped space? Then you may not reclaim the VAT from the Tax Authorities.
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No threshold, but limited deduction
The most common variant is the partial deduction charged to the profit. With this variant you can enter 80% as costs and charge it to profit. The remainder (20%) is for your own account.
Non-deductible
Fines
General literature
Clothes and personal care (exemption for artists)
Personal computers
Education for personal purposes (hobby)
Driver’s license
Personal devices (glasses, a hearing device, disability insurance - deductible in the income tax return)
Personal usage of the internet and telephone
Frequently asked Questions
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