Correctly deducting your expenses as a self-employed worker lowers both your VAT bill and your income tax bill, but it's also one of the areas where the most mistakes happen, whether from not knowing better (missing out on legitimate deductions) or from overconfidence (deducting expenses the tax authorities might not accept).
The three general requirements for an expense to be deductible
For an expense to be tax-deductible, it must generally meet three conditions:
- Be linked to your economic activity, not a personal expense unrelated to your business.
- Be supported by a full invoice in your name (a simple receipt, as a general rule, isn't enough to deduct VAT).
- Be recorded in your accounting books or activity records, within the corresponding tax year.
Common deductible expenses
- Rent for your premises or workspace (including a portion of your home, if you work from there, under specific rules).
- Utilities (electricity, water, internet), with partial deduction rules if the space is also used personally.
- Office supplies and IT equipment needed for the activity.
- Self-employed Social Security contributions.
- Insurance tied to the activity (professional liability insurance, for example).
- Training expenses related to your activity.
- Accounting, advisory, and other professional services hired for the business.
Mixed-use expenses: the trickiest area
When an expense serves both your activity and your personal life (a vehicle, a mobile phone, part of your home if you work from there), the deduction usually isn't 100%, but a percentage that must be reasonably justified based on the actual use dedicated to the activity. Deducting 100% of a clearly mixed-use expense without justification is one of the most common causes of disputes during a tax audit.
The special case of vehicles
Vehicles are one of the expenses most scrutinized by the tax authorities, since in most activities exclusive professional use isn't clear-cut. Except in activities where vehicle use is clearly necessary and exclusive (transport, sales reps constantly on the road, taxi drivers), vehicle deductibility tends to be limited or even rejected if that exclusive use isn't properly justified.
Why it pays to keep organized records
Keeping every invoice and maintaining a clear expense log throughout the year, rather than gathering everything at once at the end of the quarter, greatly reduces the risk of missing legitimate deductible expenses, while also making it much easier to respond to any future request from the tax authorities.
Calculate the VAT on your deductible expenses
Our VAT calculator lets you quickly check the taxable base and tax amount breakdown for each expense you're going to deduct, helping you keep tighter control of your accounting.