Business expense and tax deductible expenses
Fiscal and commercial expenses
All expenses are business expenses when you determine it be a business expenses. For fiscal purposes, it is a slightly different story. Business expenses are not always seen or allowed to be fiscal expenses, meaning it is not lowering (not deductible from) your profit and by this influences the amount of tax that needs to be paid.
A. Private expenses
Private expenses are expenses made for personal purposed, not for your business. Therefore, they are not tax deductible. Examples of this are the expenses of buying a television or having your hair cut ( only non performing artists).
B. Business expenses
Business expenses are the expenses you have incurred for your business, like buying some tools or registering your company to the Chamber of Commerce. These costs are fully tax deductible.
C. Mixed expenses
Mixed expenses are the expenses that are not entirely businesslike, but not entirely private either. In this case, you have to administrate which part of the cost is a private expense and for which part it is business-like. The private part is not tax deductible, but the business part is!
An example of mixed expenses: You posses a mobile phone that you use to call your clients and suppliers with (60% of total usage), but you use it to call your friends and family as well, say for 40% of the total usage. The phone was priced 60 EUR and you pay your provider 20 EUR a month. In this case 60% of the initial and the subscription costs are tax deductible. So in the first month your businesslike costs sum up to 48 EUR (60% of (60 + 20 EUR)) and in each following month your businesslike phone costs are 12 EUR (60% of 20 EUR).
List of deductible expenses
Deductible general expenses are:
- reiskosten (travel expenses)
- telefoon/fax/internet (telephone/fax/internet)
- kantoormateriaal (office supplies)
- studie/research (study/research)
- abonnementen/literatuur (literature/subscription)
- porti/verzendkosten (mail costs)
- inventaris (inventory)
- acquisitie/representatie (representation)
- lunch/diner (lunch/diner)
- kosten van de omzet (cost of sales)
- verzekeringen (insurances)
- administratiekosten (administration expenses)
- inkopen (purchases)
- afschrijvingskosten (depreciation)
- publiciteitskosten (publicity expenses)
- onderhoudskosten (maintenance expenses)
- klein inventaris (small inventory)
- werkruimte (workspace)
- persoonlijke verzorging (personal care) (only performing artist and sportspeople)
- gas, water en licht (gas, water and light) (for an office)
- rente en bankkosten (rente en bankkosten)
There is no need to keep receipts of private expenses, like medical insurance expenses, holiday expenses, clothing and barbershops. Costs made for buying clothes or going to the barber are not deductible either (except performing artist and professional sportspeople)
When you have made expenses which relate to diner, relation gifts, study or research, please mention at which occasion the expense was made. The same applies to expenses made for clothes or personal care. Only expenses that relate to your business can be used for your administration.
Do not forget to ask for a receipt containing VAT (BTW). Writing down the VAT on a receipt yourself does not make a receipt a VAT-receipt.
Regarding receipts from gasonline stations. The VAT on these might be tax deductible, however they have to be paid with your own credit card or debit card.
Not deductible for VAT but deductible for income tax as a expense:
- business related insurance statements/policies and
- Bank cost.
Business bank account
It is the most efficient if you have a separate account on which you pay and receive transactions related to your company, a business account. It is easier for yourself, because it only shows the business transactions.