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Representation

Being an entrepreneur implies have contact with relations. While having contact with relations, you might drink or eat something. These costs we refer to in the Netherlands as representation costs. Are these tax deductible?

Representation costs are tax deductible, including VAT, as you cannot claim back the VAT in these costs via the VAT return. Representation costs are also the costs the tax office inquires about immediately when an audit takes place. You have to be aware of what you spend on whom during a five year period and we can provide you with instructions how to comply with this.

You need to be well dressed yourself during such a meeting, hence our clients (especially the ladies) would like to provide invoices for clothes, shoes etc. That is not deductible, as that is a private matter. Same for meals you tend to take on your way to a destination where is a client or meals you use because you are working late. Those costs are also not deductible as the tax office stand point is: you need to eat, work or no work, hence a private matter. Moreover, the tax office will check if the costs were made in a weekend, during the period of the birthday of the owner of the company or his partner, or if any near relative got married.

At the end of the year a percentage of the representation costs made will be added to the companies profit.

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