Home business expenses are a recurring topic, especially where a business is run from a flat or house. In an article published by Prawo.pl, Piotr Sekulski, PhD, tax advisor comments on where the safe settlement of business expenses ends and where significant tax risk begins. The article discusses, among other things, appliances, cleaning and food in the context of running a business from home.
Home business expenses – risk?
Running a business from home does not mean that all household expenses can be treated as tax-deductible costs. As a rule, the safest expenses are those that have an appropriate business justification. Of course, taxpayers do include operating expenses settled according to an appropriate proportion, whereas much greater risk concerns those purchases that have a clear private character or are used both privately and for business purposes.
The full article on Prawo.pl is available here.
tax advisor Piotr Sekulski, PhD
“When a business is run from home, a simple proportion is not always enough. In the case of some expenses, the tax authorities may expect much stronger justification, and sometimes even proof that a given item is used exclusively for business purposes.”
“In practice, the key issue is not only whether an expense can be linked to the business, but also whether the taxpayer is able to genuinely demonstrate that link. The stronger the private element, the greater the risk of a dispute with the tax authorities.”
Appliances, cleaning and food – not everything can be deducted
As the commentary to the article shows, tax authorities are increasingly scrutinising private expenses or those with a mixed private-business character. Particular caution is needed with purchases of appliances, cleaning costs and food expenses, because this is exactly where it is easiest to face an allegation that the expense is not sufficiently connected with the business activity. In practice, each such case requires a separate assessment.
How can we help?
We help entrepreneurs assess which expenses incurred when running a business from home may be safely treated as tax-deductible and which create significant tax risk. We also support clients in preparing or organising documentation and in analysing whether it is worth applying for a tax ruling in a specific case.
