Do I need to buy anything before 31 December?

Only buy something before 31 December if the expense has real business use (zakelijke kosten) for your company, because buying purely to save tax rarely pays off. You only save the tax part of the expense and not the whole amount, so on balance you are out of pocket for something you did not really need. You can find more topics for entrepreneurs on our entrepreneurs hub.

Does it pay off to quickly make costs before year-end?

Making costs purely to save tax rarely pays off, because you only get the tax part back and pay the rest of the expense yourself. If you buy something for one hundred euro, for example, you only save tax on that amount and not the full one hundred euro. So an expense is only worthwhile if you actually use what you bought in your business.

When does a purchase before 31 December make sense?

A purchase before 31 December makes sense if you needed the business asset anyway and the expense has business use in your company. Then you bring the cost or the depreciation (afschrijving) forward and may benefit from the tax advantage sooner. Unsure whether to pull costs into this year or next year? Then read whether to pay costs this year or push them forward.

Does an investment before 31 December still bring an advantage?

An investment before 31 December can still bring investment deduction or depreciation (afschrijving) this year, provided you exceed the investment threshold. Below that threshold the deduction does not apply, so it pays to know where the limit lies for your tax year. Check the exact thresholds and percentages with the Belastingdienst, because those amounts are adjusted yearly and are date-sensitive.

Do you record a purchase as a cost or as an investment?

You record small purchases as a cost (zakelijke kosten) in the year itself, while you depreciate larger investments over several years. Where the line between a cost and an investment lies depends on the amount and the useful life of the business asset. A laptop you use for years is depreciated, while a small tool often counts as a cost in one go.

What do you watch for before you buy?

Before you buy, check whether the expense has real business use and whether you exceed the investment threshold for a larger business asset. Keep the invoice and record why the purchase is a business one. When in doubt, check the thresholds and limits with the Belastingdienst, so you make a purchase that moves your business forward and does not just shrink your bank balance.

Source: Belastingdienst, belastingdienst.nl. Amounts, thresholds and percentages are date-sensitive; check the current scheme before you decide.

Author: Mariusz Mojka.