Freelancers working from home: energy as a business expense

01Claiming energy as an expense

Business energy bills include 21 percent VAT. These costs are deductible under certain conditions. Among other things, it depends on whether or not the self-employed person has business premises. Business premises are, after all, only used for business purposes, which means that the self-employed entrepreneur can easily prove that he really uses the energy and gas for business purposes. In that case 21 percent VAT can always be reclaimed.

For freelancers working from home this is different. It is harder to make it plausible that the space is used only for business purposes. After all, you work in a private environment, so the energy is also used privately. Deducting all the VAT is not permitted in such a case. Yet there are conditions and calculation models with which part of the VAT can still partly be claimed as an expense.

Home office: claiming VAT on energy as an expense

Many smaller companies or freelancers have a home office. There is considerable variation in how much VAT you may deduct. Among other things, this depends on consumption. This means that a carpenter who has heavy equipment in his own shed will consume more energy. The copywriter, journalist or IT specialist has enough with a laptop.

Considerably less energy is then used for business purposes, so less may also be deducted from tax. There is only a part that you may deduct from tax. This is because you have a business energy contract, but because it is also used for private purposes. Declaring all the VAT leads to a skewed ratio and is therefore not the right way to file a return. To still be allowed to deduct VAT, you must work out a calculation.

Calculation for deducting VAT on energy costs

To be allowed to deduct the VAT on energy costs in the correct way, a calculation must be used. As a freelancer working from home you are entitled to deduct part of the VAT on the energy costs. Those energy costs must be incurred to be able to carry out the work at home.

The Belastingdienst therefore recommends using the ‘surface area method’. It works as follows:

First, you calculate the gas and energy costs of the whole home, including the workspace. Next, you calculate the floor area of the workspace alone in square metres. Then calculate the total floor area of the entire home in square metres.

Next, the energy costs of the workspace can be calculated. This can be done by dividing the floor area of the workspace in square metres by the total area of the home. Multiply the result of this sum by the total energy costs of the home.

Example

It is understandable that the sum may not be completely clear straight away. We therefore explain it in a clear example:

Suppose you have an office space of 25 square metres. The total living area is 150 square metres. The costs for business energy amount to 2000 euros per year. The sum is then:

25 / 150 x 2000 = 333,33 euros. Then take 21 percent of that: 333,33 x 0,21 = 70 euros. This means that of the 2000 euros in energy costs, 70 euros of VAT may be deducted in the VAT return.

02Deducting business energy costs with VAT exemption

Some entrepreneurs do not earn enough with their business to meet the income threshold of the Belastingdienst. These entrepreneurs, for example, only work part-time on their business and also have another full-time or part-time job. In that case it is possible that the Belastingdienst exempts the entrepreneur from VAT.

An exemption must, however, be applied for. You then do not have to file turnover tax. We call this ‘a VAT exemption’. The advantage of this exemption is that you never pay VAT to the Belastingdienst. After all, the entrepreneur does not have to charge VAT. There is also a big disadvantage: business costs cannot be deducted. This therefore also applies to deducting VAT on energy.

Freelancers working from home: energy as a business expense

As a freelancer working at home, you have to deal with energy costs. You can claim these as a business expense. Find out how.