Consumptions deductible or not is the tax question. A consumption is regarded food or beverages that are consumed. When are these tax deductible?
Consumptions deductible
You are an entrepreneur and you take out for lunch a client or potential client. The costs of this lunch is tax deductible. The other day you are going for lunch during work by yourself, this cost is not deductible. The tax office has the opinion you need to eat, regardless of work.
You purchase chocolates for that nice client of yours, this costs is deductible. You purchase chocolates for your wife, not employed by you. She assisted you so well while you worked for that client, not deductible.
The rule
The rule is that you can deduct consumption costs is very much directly related to doing business. The business does not need to be successful. The business needs to be explainable. Explainable with a diary, with notes taken.
Depending on the type of business you operate, one man company or BV company, a percentage of these costs are never deductible.
Consumption deductible – court case
A consultant with a so called one man company had an assignment in the country. He rented for the period of the contract a place near the assignment. That made he did not need to travel up and down every day. The restaurant costs and laundry costs he claimed on the company. I could not read if he also deducted the costs of the rent of the place.
The tax office denied the consumption costs deducted.
It was his private choice to not commute back and forth to his home. That private choice created consumption costs. This is too far away from the business to qualify for deduction.
The court could only agree with the tax office.
Tax is exciting
We think tax is exciting. Some of our clients are very much excited about claiming costs. Some are too exciting. They show up with the health care insurance, even the income tax. All a result from the profit made with the company, but none of them are tax deductible.
The small presents issued to clients, the lunches, dinners, drinks with clients. Those are deductible. Your McDonalds break on you way to a client is not a business cost. You could have decided to become more Dutch and bring your cheese sandwich from home. That is the thought of the Dutch tax office.
