Start with the business purpose
Costs incurred for your business interests may reduce your taxable profit. Examples include materials for customer work, software used for business and your accountant’s fees. With mixed use, only the business portion is relevant. Private expenses cannot be deducted as business costs.
A machine is not always an immediate expense
Some purchases must be spread over several years through depreciation. Assess a long-term purchase separately from consumable materials. Keep the purchase date, invoice and description so your accountant can determine the correct treatment.
Take care with clothing and a home workspace
Specific conditions apply to clothing. Overalls that can be used almost exclusively for your business are different from ordinary jeans. A room at home is not automatically a deductible workspace either. Check these categories in the Dutch Tax Administration’s guidance.
Expense deductions and VAT recovery are separate questions
If you can deduct the VAT as input tax, you normally use the cost excluding that VAT when calculating profit. Non-recoverable VAT may form part of the cost. VAT deduction has its own conditions, so assess the two questions separately.
Make your records easy to trace
- Keep the invoice or receipt with the transaction.
- Note the business purpose if it isn’t obvious.
- Link project costs to the right job.
- Explain mixed use and flag investments for your accountant.
Unsure about a particular expense?
Check the Dutch Tax Administration’s current rules and discuss the expense with your accountant. This article gives a general explanation; the treatment depends on your business and how you use the purchase.