Are the costs I made before I actually registered my business deductible?
Article ID: 149 | Last Updated: Mon, Jul 13, 2015 at 1:01 PM
Expenses in the research phase of your business
It may be that you are thinking about starting your own business. You are doing some market research and you are already buying some equipment.
Save all the receipts and invoices you receive regarding these expenses. Once you have started and registered your business you may claim back the VAT on these expenses and deduct the expenses in your income tax return. The same if you buy a computer for example with the intention to use it for your business which you want to set up. The tax authorities may want to check that you really bought the computer, literature, equipment etc. with the real intention to start a business. Of course this is easier to prove if the expense has been made just before the business is started.
The VAT on these costs can be claimed back in the first VAT return. This first VAT return must be filed on paper, unlike the following VAT returns which must be filed electronically. With the first VAT return you are requested to send the invoices for which you are claiming back VAT during the start up phase. This is not really checked though is our experience, but if there has been a big expense meaning that you are claiming back a decent amount of VAT, it is better to send a copy of the underlying invoice. In later quarters this is not required anymore.