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Company at home – deductible costs income tax?


It has become a common practice over the years that small businesses start at home, or that employees stationed abroad, work from home. Can costs related to having an office at home be deducted or reimbursed?

The requirement set is that the home office should have a separate entrance and bathroom facilities in order to qualify. And it needs to be under such circumstances that you could rent it out to a third party person. If that is the case, then you can deduct the cost of the home office. In the Netherlands nearly non of the houses/apartments meet such requirements, hence the home office costs cannot be deducted.

If you own the house, would you like to have the above mentioned situation? I doubt it. You already deduct the full mortgage, so the home office is basically about the utility costs and the write off of the real estate. But please realize that for businesses the capital gain tax does exist. So any profit made during the sale of the house allocated to the home office part is subject to the progressive Box 1 tax rate, whereas it would be tax free under normal circumstances. During the past few years house prices have dropped, but in the long run they always go up.

The moment you decide to terminate your home office and you have allocated it as such, then that moment you need to valuate the part of the house where you have the home office and ‘sell’ it to yourself. If the value of the house has increased, you made a capital gain, subject to income tax.

In the home office, that is not accepted as such by the tax office, you will make costs for the furniture etc. Non of these costs are tax deductible, that is rather explicit stated in the income tax act. But we do know the rule for telephone and internet costs, that if they are at least 10% for business, you can deduct 100% of the costs.

An employee working from home that asks for a reimbursement of the home office costs will learn that this is subject to wage tax.



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