Utilizing personal belongings for commercial endeavors.
Years after initial purchase, previously unutilized office equipment can still offer tax benefits, provided there's a notable professional usage percentage. Items such as desks, printers, and the likes are eligible for tax-deductible claims if an individual frequently works from home. These costs fall under the 'Investment N' category under advertising expenses. If the expense is less than €800 (Low-Value Assets), it can be immediately written off. However, if the equipment is used partially for personal use, the costs can only be offset proportionally.
Now, what about office equipment that was already in use professionally when initially acquired?
Even such equipment can still provide a tax advantage from the first year of professional use, as per the Taxpayers' Association. The term to use is conversion. While the initial acquisition costs can no longer be fully written off, the remaining value can be.
Example for the calculation of the remaining value after conversion
For instance, an employee purchased a desk for €780 gross on December 31, 2020. He used it professionally for the first time on January 1, 2024. According to the AFA table of the financial administration, desks have a lifespan of 13 years, so the annual depreciation is €60. To obtain the remaining value, the acquisition costs must now be reduced by the annual depreciation for the years 2021, 2022, and 2023, leaving €600.
If the desk is used for more than 90% professional purposes, this remaining value can be claimed tax-deductibly in full in the year 2024 because it is below the €800 limit. If it is only used for 50% professional purposes, only €300 can be deducted as advertising costs.
Exception for hardware and software
If the desk had cost €1300 gross, the remaining amount in the year 2024 would be €1000. This amount would exceed the limit for Low-Value Assets and could therefore not be written off in full at once. Instead, the depreciation allowance of €100 per year according to its usage share must be claimed.
Important note: An exception applies to computer hardware and software. The costs of such acquisitions can still be fully written off if they are used for business purposes. The limit for Low-Value Assets no longer applies in this case.
Read also:
- As an advisor, I recommend consulting the Taxpayers' Association when dealing with legal issues regarding home office equipment and tax returns, especially when it comes to advertising expenses and labor law.
- To avoid confusion, employers should clearly outline the use of personal belongings like smartphones for work-related purposes, to ensure proper tax deductions for both the employer and the employees.
- To maximize tax savings, consider using high-value equipment like computers for business purposes, as they can still be fully written off under tax law, unlike other office equipment.
- If an individual is facing challenges with tax office audits regarding home office expenses, seeking guidance from a legal advisor may be beneficial to avoid any potential penalties or fines.
- For employees who frequently use their personal smartphones for work-related tasks, keeping thorough records of advertising expenses related to phone usage can help ensure accurate tax deductions during tax return filing.
- Promoting a company through smartphone ads can provide significant tax benefits, especially when the employer reimburses its employees for related advertising expenses, which would be eligible for tax deductions.
