14 March 2022, by Arnold Waal
Dentist costs are not company costs, as you can obviously imagine. Well, one tax advisor did not get the memo and tried to claim his dentist costs as a company expense. Was he right? Arnold Waal from Tax is Exciting takes a look at what can be claimed as business costs, and what might be crossing the line.
What are company costs?Company costs are costs made to run a company. Office rent, stationary, a desk, and a computer are cost aspects not under debate by the Dutch tax office. Other aspects such as ships or boats, guns, animals, and fines are excluded as company expenses.
Entrepreneurs have the freedom to allocate costs they think are necessary for the running of their company. For instance, if an entrepreneur prefers to drive a Rolls Royce on his five-kilometre commute every day, the Dutch tax office cannot deny these costs based on the fact a bicycle is cheaper.
However, this is up to a certain line. The line is grey, but one dentist pushed the limits in the past: the dentist purchased an aeroplane to visit his clients within the Dutch borders. For the Dutch tax office, this was the line being crossed and these excessive aeroplane costs were not accepted.
Looking good is not a company expenseOur clients often provide receipts of a suit, shoes, hairdressers and the like. These costs are not business costs. The client might argue that these costs were specifically made to look good for the client; they would not wear the suit at home or would have visited the hair salon weekly if it was not for their clients.
For these costs, article 3,14 in the income tax act states that costs made to support a certain flair in life as a result of which more business is done, are not accepted as such.
Dentist costs are not company costsA tax advisor claimed 2.308 euros in dental costs as company costs in their 2016 income tax return. The Dutch tax office denied the costs and the tax advisor went to court. In court, the tax advisor could not substantiate why dental costs were business costs instead of personal costs. As the personal use of the teeth by far outweighed their business purpose, the deduction was denied.
As previously stated, these costs can be denied based on article 3,14 of the income tax act.
A business relation that takes care of their teeth is very much appreciated by Tax is Exciting during a conversation, but bear in mind that a conversation with your tax advisor does not make the toothbrush tax-deductible. If you have any more questions about what you can claim as business expenses or any queries about tax in general, get in touch with the experts at Tax is Exciting.