Business costs: declaring mixed expenses
As an entrepreneur in the Netherlands (zzp), you can deduct business costs from your profit so you pay less tax. There are also limited deductible costs, also known as mixed expenses (‘gemengde kosten’). These mixed expenses are not fully deductible because they contain both business and private elements. A good example of this is a business lunch. Read here how you can deduct mixed expenses from your profit.
Mixed expenses are not fully tax-deductible
Mixed expenses are expenses that are not fully businesslike, but also not entirely private either. Therefore, they are only partly deductible. Here, we will give some examples of the limited deductible expenses.
- Food and drinks. Everyone has to eat and drink; it is not a standard deductible. But a business lunch has a business element and, therefore, is partly deductible.
- Representation expenses (business gifts, receptions, parties, etc.). You incur these costs to represent your company, but do not confuse this with advertising costs (these are 100% deductible). Representation costs also fall partly in the private sphere, such as a company party.
- Congresses, seminars, excursions, etc. Participation in a congress belongs to mixed expenses and is not part of necessary study costs.
- Cost of travel and lodging. A maximum of € 1,500 applies to travel and accommodation costs.
Mixed expenses are deductible in two ways
There are two ways to deduct mixed expenses. The Dutch tax authorization allows you to choose between the threshold and the 80/20 scheme.
Option 1 | the threshold
The first option to deduct mixed expenses is to use the threshold. This option is only fiscally advantageous if you incur a lot of limited deductible costs. In 2022, the threshold is €4,800 (in 2021, this was €4,700).
Option 2 | 80/20 regulation
Self-employed people often do not reach the threshold. That is why the 80/20 scheme is created. This means that 80% of the mixed expenses are deductible, and 20% is for your own account.
Determine which option is fiscally advantageous
For most self-employed professionals in the Netherlands, the 80/20 scheme is most beneficial. We explain this in the example below.
- Travel costs: €2,000
- Business dinners: €1,800
- Promotional gifts: €600
- Costs for a reception: € 3,500
The total annual mixed costs amount to €7,900. However, travel and accommodation expenses are only deductible up to € 1,500, making the total amount € 7,400.
Option 1 (threshold): you may deduct €2,600 (7,400 – 4,800) from your profit.
Option 2 (80/20 scheme): in this case, you may deduct €5,920 (0.8 x 7,400) from your profit. In this case, this is the most advantageous option.
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