Expense deductibility: business use and VAT

What deductibility is

Not every business expense is 100 % deductible. A freelance expense can be deductible only in part, and in two separate ways worth keeping apart: how much it reduces your PIT, and how much VAT you recover in your VAT return. Cuéntamo tracks this with two percentages per expense.

The point is you don't have to think about this invoice by invoice: you set the percentages once as profiles and they apply automatically to expenses in that category or tag. When an expense is the exception, you change it just for that one.

The two percentages

• Business use: how much of the expense belongs to your activity and is therefore deductible in PIT. A car or a home office you use 50 % for work deducts half the expense on form 130.
• Deductible VAT: how much of the input VAT you can offset on form 303. It's separate from business use because VAT has its own rules: an expense can be deductible for PIT and still have its VAT fully or partly non-deductible.

One important detail: the VAT you don't deduct isn't lost, it becomes a higher expense for PIT. If you pay €100 + €10 VAT on a client gift and that VAT isn't deductible, the PIT-deductible expense is €110, not €100.

Deductibility profiles

To avoid repeating percentages expense by expense, you define profiles in Settings → Freelance → "Deductibility profiles". Each profile is those two percentages (business use and deductible VAT) with a name.

A profile is assigned to a category or a tag (including the global categories Cuéntamo ships by default). From then on, every expense in that category or with that tag inherits the profile automatically, with nothing to touch.

Who wins: the priority order

An expense can have a category profile and a tag profile at once, plus its own override. Cuéntamo always breaks the tie in this order, strongest to weakest:

1. Document — the override you set invoice by invoice wins over everything else.
2. Tag — if the expense has a tag with a profile, the tag beats the category.
3. Category — if there's no tag with a profile, the category's is used.
4. 100 % by default — with nothing configured, the expense is fully deductible.

The idea: the category sets the general case (all "Car" expenses at 50 %), the tag fine-tunes a specific group, and the document resolves the one-off exception.

Invoice-by-invoice override

When a specific expense doesn't fit its profile, you change it just for that one from the collapsible "Deductibility" block in the tax document editor (see Tax books). There you pick the expense's situation:

• 100 % deductible — the normal case.
• No deductible VAT — deductible for PIT but without recovering the VAT (VAT-exempt activity, client entertainment…); that VAT becomes a higher expense.
• Partial use — you enter both percentages by hand (business use and deductible VAT).
• Inherit from profile — goes back to using the tag's or category's profile.

Whatever you set here wins over any profile.

Common examples

• Mixed-use car → business use 50 % and deductible VAT 50 % (article 95 of the VAT Act for mixed-use vehicles). You deduct half the expense in PIT and half the VAT on form 303.
• Hospitality and catering → the VAT is deductible if the expense is deductible in your PIT (art. 96.One.6 of the VAT Act). Depending on the case, a business meal may or may not have deductible VAT: it's not an automatic 0 %.
• Client entertainment (invitations, business gifts) → deductible VAT 0 %: its VAT gives no right to deduction (art. 96.One.5 of the VAT Act) and becomes a higher expense.
• Home office → business use at the percentage of floor area assigned to the activity (utilities have their own rules; use the profile that fits your case).
• Expense of a VAT-exempt activity (for example, medical services, training or insurance) → deductible VAT 0 %: since you don't charge VAT, you don't deduct the input VAT either — it stays as a cost.

How your settlements reflect it

Both forms respect these percentages without you doing any maths:

• Form 130 (PIT) — the non-business part doesn't count as an expense. Non-deductible VAT does add as a higher expense.
• Form 303 (VAT) — only the deductible part of input VAT is offset.

You can check it in the Tax forecast: the settlements table already counts each expense by its deductible part, both for PIT and for VAT.