Expenses: if you use them in the right way, they will help you grow your business and you will pay fewer taxes. We want you to be successful: that is why we explain here once and for all what are these expenses and how you can best deal with these handfuls of tickets and VAT receipts.
Before you dive in, next to this post, we have also compiled a quick spreadsheet giving you all the details you need to know if you are looking for info on specific professional costs: basically what you can claim and how much deductibility you can expect.
You have suggestions? Send us an email at firstname.lastname@example.org and we’ll be in touch.
At its core, the principle of taxation for self-employed workers in Belgium is very simple: you get taxed on what you earn. In other words, the more you earn, the more you pay taxes.
As with everything in life though, there is a small but important nuance: Belgian tax authorities understand that you need to spend money to make your business grow.
They believe it should thus be the profit generated by your activity that should be taxed, not your mere revenue. In other words, it means that you will eventually be taxed on what you earn minus the expenses that you take on for your business.
It does also mean that the higher your costs, the lower your net income and the lower the amount of taxes that you will be paying.
If spending money makes you feel good, spending it wisely makes you feel even better – because, at the end, not every spending can be considered as a professional expense…
Professional expenses should meet these four criteria. For a given expense, should you answer “yes” to the 4 following questions, you can surely deduct it from your taxes:
There are business expenses that are easily recognizable, like the purchase of your gown when you are a lawyer, or safety shoes when you are working in construction.
Another straightforward example is your social contributions. You would not need to pay them if you were not self-employed: they are professional costs as well, all 100% deductible.
Certain expenses cannot fully be attributed to your business: we call these expenses “mixed costs”. You will only deduct the “professional part” of those expenses. For instance, one room in your house is in practice your home office. The deductibility of these square meters dedicated to your work is calculated at the pro-rata of the whole house and deducted accordingly.
Some expenses are only deductible for parts of the total amount: gifts to customers are deductible for 50%. Restaurant expenses are only deductible for 69%.
Since all of these expenses might be a bit too much to remember together with how much they are deductible, we compiled a helpful list for you!
Finally, you also have to prove that you have actually incurred all these costs: an invoice, a proper VAT receipt, an expense report, even something simple as a receipt can be accepted.
Don’t forget to keep these documents though, the government can still ask for this proof 7 years after you have submitted it for the first time.
Time to get some extra shoeboxes! Or start using Accountable so you can capture them straight from the camera of your smartphone.
Thanks to the Digital Act, this is considered evidence in the first instance in case of an audit. Beware, auditors still have the right to ask for the paper version, if they wish.
Pro tip: If you make bigger investments, like a new computer, for example, you can write off the purchase of this investment over a number of years.
Any professional expense should have a direct link to your professional activity: for example, if a tax inspector sees a VAT receipt for a dinner in a top-notch restaurant on Valentine’s Day, chances are that she or he becomes a little suspicious ;-).
The same logic applies to restaurants at the weekend. Don’t give in to all those temptations that everyone, especially tax inspectors, knows!
Since 2018, all self-employed workers can opt for lump-sum expenses.
In practice, this means that you no longer have to save all those receipts in your shoebox at home or in your wallet.
If you are self-employed with commercial activity, you deduct 30% (up to 4720 euro) from your income, excluding the purchase of goods (including raw material) and social contributions. In other words, you can deduct the purchase of goods (including raw material), your social security contributions and a maximum of 4720 euro from your taxable base.
If you are a liberal profession, you will be able to deduct a progressive percentage of your income, with a maximum of 4150 euros (for 2018).
Going for lump-sum expenses only makes sense if you are a self-employed with very little costs – under 30% of your revenue. This can be especially convenient for self-employed with a complementary occupation.
Still, we made keeping track of your expenses so easy that it is nearly always better to stick to your actual expenses. Do not hesitate to try it out in our app!
Let us know if you have any question & contact us on email@example.com