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How do you choose the professional use for an expense?

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You do not recover the full VAT on your professional expenses. Still, what you recover depends partly on you. and the choice of professional use that you make. Apart from that, the tax administration sets the rules. Accountable takes into account both your choice and tax rules when calculating your VAT total.

 It is on you to estimate the professional use of each expense

🚲 You invested in the latest fancy bike. This bike is fully deductible, which makes it even more enjoyable to ride. Still, you ride your new bike as much for fun than for work. If so, you need to indicate that professional use for that expense is 50%.

🖥  You like to distinguish business and private lives. That is so important to you that you use your professional laptop exclusively for your business. The tax controller would find only professional software and no holiday pictures on that professional laptop. In that case, you can input 100% of professional use.

In short, for each expense, think in terms of use: is your use partly or strictly professional? Choose accordingly, fairly.

Your job is done now. Accountable picks it up from there and makes sure you recover as much VAT as legally possible.

Whatever professional use you choose to input, there is a ceiling on the percentage of VAT you can recover for most expenses

🖥  We all agree on the fact that professional use, for your laptop, is 100%. Still, VAT on a laptop is only deductible up to 75%.  Accountable makes sure these rules apply automatically to your expense.

The VAT that you are entitled to recover is also linked to the number of days that you are working.

It could be that your percentage of professional exceeds the proportion of your time that you dedicate to your self-employed activity. In that case, the percentage of professional use adapts automatically, according to the number of days you work as self-employed.

🗓 The tax administration assumes that a self-employed works 5 days out of 7. These working days impact the amount of VAT that you do actually recover. A complementary self-employed who works 2 days a week would recover less VAT than the full-time self-employed.

What you should remember?

You rarely recover the full VAT amount that is mentioned on your purchase invoice.

What you should forget?

The reasons that explain why VAT is not always fully recoverable: only the proportion of professional use depends on you and your decision. Accountable takes care of all the rest, in order for you to recover as much VAT as legally allowed.

Hassan Ayed, Certified Accountant & Mindful Tax Adviser

A word about the author

Hassan Ayed, Certified Accountant & Mindful Tax Adviser

Hassan is Chartered Accountant. Ex-PWC, he built his own multi-million fiduciary from the ground up.
When Hassan is not running numbers, doing tax optimizations or digitizing accounting processes, he loves to run around and play with his 2 kids

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