Fixed amount
The fixed deduction amount for entrepreneurs who pay personal income tax is €5,700 in 2025. For corporate income tax, this is also €5,700 or 0.4% of total payroll, whichever is higher.
Partially deductible expenses
Mixed business expenses have both business and private elements. Because of the private component, these costs are only partially deductible. It’s wise to review whether partially deductible expenses apply to you. We’re happy to walk you through your situation.
Partially deductible expenses
Partially deductible expenses may include expenses related to:
- Beverages, food, and stimulants (such as at a staff party).
- Representation (for example, business gifts, receptions, festive gatherings, and entertainment).
- Conferences, seminars, symposiums, excursions, study trips, and similar events (such as a business club trip).
Partial deduction
The above expenses are therefore only partially deductible. For entrepreneurs subject to personal income tax, 80% of these expenses is deductible (20% deduction limitation); for corporate income tax purposes, 73.5% is deductible (26.5% limitation). Instead of applying this percentage, entrepreneurs may also choose to exclude a fixed amount from the profit calculation.
Make a well-informed choice!
This shows that it’s advisable to make an informed choice. First calculate whether opting for the fixed amount is financially best.
- For entrepreneurs subject to personal income tax, the fixed amount of €5,700 is best only if your total mixed expenses in 2025 exceed €28,000.
- Under corporate income tax, the calculation is more complex, since the payroll amount also plays a role.
Note: The law stipulates that if you don’t make a choice, mixed expenses are not deductible up to the fixed amount.
Non-deductible expenses
In addition to partially deductible costs, certain categories of expenses are fully excluded from deduction. These include:
- Fines
- Bribes
- Recreational boats used for promotional purposes
- Clothing (except workwear)
- General reading materials for personal use
Partially deductible expenses & the Work-Related Expenses scheme (WKR)
Many costs that are normally only partially deductible can be treated differently through the Work-Related Expenses Scheme (WKR). Reimbursements or benefits provided to employees that fall within the WKR’s discretionary margin are not considered taxable wages and are therefore fiscally advantageous. This includes representation expenses during a team-building day or small tokens of appreciation.
Partially deductible expenses & horizontal monitoring
Partially deductible expenses are often a point of focus during tax audits and reviews. For companies under horizontal monitoring, these expenses are a key component of the Tax Control Framework. Horizontal monitoring offers the opportunity to discuss complex tax matters in advance, including partially deductible expenses.
More questions?
It’s wise to assess whether partially deductible expenses apply to your situation. Unsure or would you like more information? We’re happy to support you.
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