A coffee to start the day, a soft drink during work, or a jar of candy for your employees: these may seem like small expenses, but from a tax perspective, there can be a big difference in how to book these costs.
Specific rules apply to sole proprietors. What they purchase for themselves is often treated differently than what they provide for customers or employees. This can be confusing, especially when they read online that others do deduct the full cost of their coffee.
In this article, we explain the rules for coffee, water, tea, or soft drinks. Did you know that these rules also apply to fruit, soup, or candy, for example? So feel free to interpret this article more broadly; fruit, soup, and candy are also subject to these rules.
1️⃣ Coffee, tea, and soft drinks for personal use: not deductible
Are you self-employed in a sole proprietorship and do you buy coffee, soft drinks, or snacks for yourself? Then you cannot record these expenses in your accounting. Not even if you consume them during your working hours.
The tax authorities simply regard these as private expenses. And private expenses do not belong in your accounts.
Examples:
- You buy coffee for home every month → not deductible.
- You fill the fridge in your home office with soft drinks → not deductible.
- You treat yourself to a box of cookies to enjoy at work → not deductible.
The tax authorities do not care that you consume the drinks during work: as long as the drinks are only for you, they are considered for personal use. The same principle applies to VAT: you cannot recover the VAT on these purchases.
In short: from a tax perspective, these purchases are entirely private.
2️⃣ Coffee, tea, and soft drinks for external relations: 50% deductible
The situation is different when you provide drinks for customers, suppliers, or other business relations. In that case, you can claim these costs in your accounting, but they fall under “reception costs”.
And precisely because they are reception costs, they are only 50% tax deductible. Even though the professional use is 100%, only 50% remains in your accounts due to disallowed expenses.
VAT, on the other hand, is usually not deductible for these costs.
Examples of what is allowed:
- Offering coffee and soft drinks during a customer meeting → 50% deductible
- Providing water or soft drinks at an information session or workshop → 50% deductible
- Offering coffee to a supplier during a meeting → 50% deductible
➡️ Do you use Dexxter? Then you don’t have to worry about the tax treatment yourself. Simply select the cost category ‘reception costs’ and Dexxter will automatically do the math for you.
3️⃣ Coffee, tea, and soft drinks for employees: 100% deductible
Do you have employees? Then more flexible rules apply. Expenses such as coffee, water, soft drinks, soup, fruit, or candy for employees are fully deductible.
This means:
- 100% tax-deductible expense
- 100% recoverable VAT
Why this difference? The tax authorities consider this a benefit for employees, which is accepted as a professional expense. It is quite a big difference that in this situation you can claim 100% of the cost and also recover the VAT in full.
But then the purchases must be for your employees. Without employees, this is not an option.
Why you sometimes read online that all drinks are tax deductible
If you search online for information about coffee and soft drinks in your accounting, it sometimes seems as if you can always deduct these costs. But that is not correct.
Much of that information is about corporations, and different rules apply there.
In a corporation, you can (often) claim coffee, soft drinks, or snacks for your own use during your self-employed activities. The tax authorities do not simply view this as private expenditure, because you are allowed to grant yourself benefits as a director. Benefits such as coffee, tea, soft drinks, etc.
And that’s where the confusion arises: on a forum, someone says that they book all their coffee expenses, but that (usually) doesn’t work for sole proprietorships.
Tips for your accounting
- Keep receipts carefully and preferably write down what each purchase was for.
- Make a distinction in your accounting between personal consumption, customer receptions and employees.
- Use smart accounting software such as Dexxter, which automatically applies the correct deduction percentages.
- Don’t be misled by online forums: what applies to corporations does not always apply to sole proprietorships.
The above rules apply equally to equipment. For example, the tax rules for coffee also apply to the purchase of a coffee machine. Are you buying a kettle for tea? Then the purchase of the kettle is subject to the same rules as the purchase of tea.
In short: Can coffee, tea, and soft drinks be included in the accounts?
For self-employed people with a sole proprietorship, the rules are simple:
- Coffee, tea, soft drinks, fruit, snacks, etc. for personal use → private expense and therefore not deductible.
- Coffee or soft drinks for customers → can be claimed in your accounts, but only 50% is deductible (disallowed expenses). VAT is not deductible.
- For employees → can be claimed in full in your accounts, and VAT is also 100% recoverable.
