Deductible business expenses: what counts and what does not

Every euro of business costs lowers your profit, and therefore your tax. Yet many freelancers leave deductions on the table, or deduct things that are not allowed. The main rule is simple: costs are deductible when you incur them for your business. The details are stricter.

Fully deductible

• Professional literature, software and subscriptions you use for work.
• Phone and internet costs for the business share of the use.
• Insurance such as professional liability or disability insurance (the AOV premium is deductible as an income provision).
• Accounting and advice: your accountant, bookkeeping software, legal advice.
• Marketing: your website, ads, business cards.
• Travel: business public transport in full; your private car at 0.23 euros per business kilometre.

Partly deductible

Costs with a private flavour are restricted. Food and drinks with clients, entertainment, conferences and study trips are not fully deductible: you either apply a fixed threshold or deduct 80% of these costs. For most freelancers the 80% option works out best.

Not deductible

• Fines, including business traffic fines.
• Regular clothing. Only genuine workwear counts: clothing (almost) exclusively suitable for work, or with a large permanent logo.
• The home office, except in rare cases: the workspace needs its own entrance and facilities and must earn you most of your income.
• Private expenses you "sometimes also" use for work, without a demonstrable business share.

Assets: depreciate instead of deduct

Things that last longer and cost more than 450 euros (excluding VAT), like a laptop or camera, are not expensed at once. You depreciate them, usually over five years, and above roughly 2,900 euros of investments per year the investment deduction comes on top. Also read which other deductions exist.

Keep your receipts (7 years)

The Tax Administration can audit up to seven years back, so keep invoices and receipts that long; digital is fine. Note immediately what the expense was for; a lunch receipt without context proves nothing in an audit. And do not forget the VAT: you reclaim the input VAT on your business costs each quarter through the VAT return.

In Finq you record expenses with a photo of the receipt; the VAT is calculated automatically and the deductible input VAT is ready for your return.