How do I know what I can deduct?
Office and building expenses 🏪 are deductible both at home and outside the home (100% professional office/practice). In all cases, you can justify a professional activity at home (administrative work after the working day, teleworking, a practice for patients, etc.). This covers rent, insurance, taxes, fittings, decoration, and so on.
Energy costs are covered in a separate category (water, gas, electricity, heating oil).
🏬 Outside the home
The situation is straightforward if you rent or own an office or practice outside your home: all your costs are fully deductible and you have invoices to support them.
🏡 At home
Use of space
| Sole proprietorship | Company |
Owner of your home | Deduct the depreciation of the property but taxation on resale | Assign rent to the executive with limits to respect (based on the cadastral income) |
Tenant of your home | Deduct a % of the rent only if provided for in the lease (very rare for the landlord to agree) | Same |
Recurring and occasional costs
| Sole proprietorship | Company |
Recurring costs (fire insurance, co-ownership charges, municipal and provincial taxes, and property withholding tax) | Flat rate | Flat rate |
Occasional costs (minor fittings, furniture, decoration, property works or maintenance products) | Based on invoices (note: they must relate only to the professional portion) | Based on invoices (note: they must relate only to the professional portion) |
How do you determine the flat rate for recurring costs? You cannot use the NSSO flat rates used for employees. Instead, simply start from your actual costs 🤓 On average, we observe among BILLY clients that the office and building flat rate is €15/month for sole proprietorships and €40/month for companies (excluding the water, gas, electricity, heating oil flat rate).
How do you determine the business use percentage? Simply calculate the ratio between the professional area and the total area, including shared spaces on a pro-rata basis (for example, toilets). If you still live with your parents, in shared accommodation, or simply do not have a room dedicated to your activity, contact your BILLY adviser to assess the business use percentage together.
To find out more
Rent deduction: you rent a property dedicated entirely (see 1. above) or partially (see 2. above) to your activity. It is rare for private landlords to agree to the deduction of professional rent, as their taxation would increase significantly. On the other hand, if the building owner is a company, its taxation is not affected by the type of rental (private residence or professional occupation).
Owner as sole proprietorship: the depreciation deduction is limited by the depreciation period (20 to 33 years) and the business use percentage. Furthermore, any capital gain on resale will be taxed. The benefit of doing so may therefore be limited! If your company owns the building, there is no question to ask: depreciation will be deducted!
Company owning a building used as both a home and an office/practice: your company deducts the depreciation of the property and records a benefit in kind for you. This replaces the rent you would otherwise pay to your company. This situation is not ideal as it blurs the separation of assets. It is also not well regarded by the tax authorities.
💡 The business use ratio is calculated by considering the area of the professional space relative to the total area. Take measurements and keep a record of your calculation. In the event of an audit, the tax authorities may come and verify this on site.