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Deductibility of business trip expenses

Deductibility of business trip expenses

In accordance with Article 49 of the Belgian Income Tax Code, several conditions have to be met for an expense to be deductible.

Business expenses are deductible if the taxpayer has incurred them during the taxable period and if he justifies their existence and amount by means of supportive documents or, when this is not possible, by other means of proof but the oath.

In accordance with Article 49 of the Belgian Income Tax Code, several conditions have to be met for an expense to be deductible.

The business expenses are deductible if the taxpayer has incurred them during the taxable period and if he justifies their existence and their amount by supportive documents or, when this is not possible, by other means of proof but the oath.

The business expenses are considered as having been made during the taxable period, if during this period they are actually paid or have acquired the character of debts or losses and are recognized as such.

The question that should be asked in the first place is what should be understood legally as “business expenses”. Section 52 of the Income Tax Code sets out a non-exhaustive list of business expenses:

  1. rent and rental charges;
  2. the interests of capital borrowed from third parties and engaged in exploitation;
  3. the remuneration of staff;
  4. compensation for members of the family of the taxpayer, who work with him;
  5. pensions, lifetime or temporary annuities and allowances, pursuant to a contractual obligation granted to former staff members or their dependents;
  6. depreciation related to expenses and intangible and tangible fixed assets which use is limited in time, etc.

The caselaw has greatly expanded this list, e.g. the costs of participation in networking events can be considered business expenses if they allow the taxpayer to acquire or retain business incomes.

The Belgian tax services have always been suspicious of taxpayers who claim expenses for events abroad. The administration had issued a circular on this subject (AFER n°4/2002 du 19 février 2002) on the treatment of expenditure incurred by attending seminars in exclusive and idyllic resorts.

The business expenses may not be deducted if:

  • they have not been done in order to acquire or retain taxable income;
  • they unreasonably exceed business needs.

This implies that should be totally excluded from the deductible business expenses:

  • all expenses related to travel or residence of the spouse of the taxpayer;
  • all expenses relating to entertainment, tourism and gastronomy ;
  • all the exaggerated cost of travel and subsistence expenses, such as excessive hotel and restaurant costs.

 

2015-11-13T06:36:09+00:00November 13th, 2015|In Belgium, Tax|