What expenses can you deduct as a self-employed? We give you a handy overview of the main deductible expenses as a self-employed person.
A professional expense, or deductible expense, is an expense that is tax deductible. You can deduct this expense for tax purposes if you incurred the expense during the year to obtain taxable professional income. Each expense is necessary to run your business.
Income tax expenses
Annually, these professional expenses will count through your personal income tax. The total amount of your expenses is then deducted from your turnover. This end result is your net income or your net professional income on which you will pay taxes. The higher this amount, the more taxes you will have to pay at the end of the year.
On most goods and services you buy, you pay a bit of VAT. If you are liable for VAT yourself, in many cases you can recover it from the VAT administration (i.e. the government). But there are some conditions, which are strictly monitored. This is what you need to watch out for:
The invoice is 100% correct
The invoice proves how much VAT you paid. Only if the invoice is completely correct can you recover the VAT. A lot can go wrong: the VAT percentage must be correct and all necessary information must be included, such as your VAT number, a description of the goods or services, ... . The tax authorities have become a little more flexible on the latter point. Nevertheless, it is still very important that you check the invoices you receive carefully and have them adjusted if necessary. It can avoid many a discussion with the VAT inspector.
Example: a supplier charges 21% VAT, when in fact it should only be 6%. You pay 21% anyway and reclaim that amount via the VAT return. Then you only get 6% back, because 'wrongly charged VAT is not deductible', even though you did pay 21%. So it is up to you to check whether the VAT on the invoice is correct. Is that not the case? Then ask your supplier for a correct invoice.
What are the conditions for deductible professional expenses?
Each expense must meet four conditions:
The expense is work-related; you may not enter any private expenses.
The expense provides you with taxable income and thus keeps your business running. These expenses include office equipment, machinery or business meals.
The expense must be paid in the same year in which you want to deduct it from your taxes.
You need proof of each expense: invoice, receipt, expense account or VAT receipt.
So which expenses can you deduct?
100 % deductible expenses:
There are a lot of expenses you make professionally that you can fully deduct from your taxes when you have a separate office outside your home, such as:
Interest on your loan, including your car loan
Office equipment, materials, machinery, clothing
All costs related to your space: heating, electricity, telephone, internet
Social security contributions in each quarter
Private Supplementary Pension for the Self-employed (PSPS) (PLCI in French and VAPZ in Dutch)
Accounting fees and accounting tools like Accountable are a 100% deductible.
Large investments to amortise:
Larger, more expensive investments have a longer lifespan. Think of an office, car, machine or laptop. You write off these investments annually; they are not a one-off professional expense. So you can spread the cost of a laptop over three years, and for a car over five years.
Some expenses are partially deductible:
There are numerous mixed professional costs when you have an office in your private home, for example. As an expense, you can enter only the area of the office space. This applies to internet, telephone, heating, electricity, etc.
Luckily having a home office comes with some perks too, like the ability to deduct your Spotify expenses partially. Also, if you host clients in your home you can deduct coffee, tea or even flowers.
Restaurant costs: 69%
Car costs: depends on the type of car you're driving
Business gifts: 50%
Not deductible: traffic fines and non-specific clothing
Not making a lot of costs?
you can also opt for flat-rate professional expenses. These costs are determined by a percentage of your turnover. The higher your turnover, the smaller the percentage. The big advantage of this is that you do not need to keep proof of purchase and there is never any discussion with the tax authorities about this. However, a lot of liberal professionals opt for the classic professional expenses because these amounts are usually higher.
Didn't find the expenses you wanted to deduct in this article? Check out our search tool to find more costs you can deduct. Still have a specific question. Feel free to message us and we'll get back to you as soon as we can.