Fiscal Issues (6): Business Costs

Bart Van den Bossche writes:

What is a business cost? For someone starting as a self-employed person, this question is something new and one you will face everyday.

A simple definition is that a business cost is any expense necessary to achieve the objectives of your professional activity.

As a self-employed lawyer starting your professional activity, examples of business expenses may include money spent on:

- Law books
- Law conferences
- Visiting clients
- Bar and other professional membership fees

One example clients often ask me about are work clothes, particularly business suits. In Belgium, business suits (and shoes) are generally not a deductible business expense. If you have to wear a particular type of clothes for professional reasons (such as a gown and wig for an English barrister) then that is a deductible expense.

There are many other examples and so if you are uncertain, ask your accountant.
An advantage in using an accountant is that she or he can act as a check on what is a legitimate business cost as you adjust to being self-employed.

Why is this issue important?

Approximately every three years, your professional accounts will be checked by the Belgian tax authorities.

If the tax authorities dispute any of the business expenses you have chosen to deduct, the tax authority will revise your professional accounts according to what it thinks is correct, and then you will be asked to repay the difference. Your accountant will help you avoid such unpleasant surprises.

Next article: (7) Car

Author: Bart Van den Bossche©
First published: 12 November 2005
Last updated: 19 August 2006