Many self-employed people pay parking fees when they go to see clients or are on their way to a job. But what about deducting these costs and VAT? In this article, we explain when you can deduct parking costs and whether you can reclaim the VAT. We also tell you the best way to put this into your accounts.
When are parking costs business deductible?
Whether you can deduct parking costs depends entirely on how you use your car in your business.
Company car: Do you drive a car registered in your company's name? Then parking costs for business trips simply fall under business expenses. So you can simply deduct these costs from your profit.
Private car for business: Do you use your own private car for work? Then you may not deduct parking costs separately. This is because the tax authorities already include those costs in the kilometre allowance of €0.23 per business kilometre.
An example.
- Jan drives a company car. He parks at a customer's premises and pays a €10 parking fee. The receipt shows €1.74 VAT. Jan may then reclaim this VAT and enter the amount without VAT as a business expense.
- Sara uses her private car. She parks on the street and pays €5. Because her car is private, she cannot deduct these costs separately. Moreover, there is no VAT on street parking.
VAT on parking charges: reclaimable or not?
Not all parking charges include VAT. It depends entirely on where you park:
On-street parking (municipality): Here, you do not pay VAT. This is a council levy, so you cannot reclaim the VAT.
Parking in a car park: Commercial garages often charge 21% VAT. You can claim that back, though, if you park for business trips.
Receipt or invoice required
Do you want to deduct parking costs on a business basis or reclaim VAT? Then you always need proof, such as a parking receipt or invoice. Please note the following.
- The receipt should show that you have paid. Therefore, pay preferably with your business account.
- For costs above €100, the invoice must contain additional information. Think of your company name and the supplier's VAT number.
Free tip: use parking apps such as Easypark or Yellowbrick. They will send you one clear invoice with all your payments and a clear VAT specification. Very convenient!
Processing in your accounts
Company car: Book the expenses without VAT as business expenses. You then set the VAT aside as input tax.
Private car: Do not book parking costs separately, but work with the kilometre allowance of €0.23 per kilometre. If you park in a garage with VAT, you can sometimes (partly) reclaim that VAT. As long as you can prove its business use.
Conclusion
Parking costs are sometimes deductible for self-employed people on a business basis. This depends on the use of the car. With a company car, you may reclaim both the costs and the VAT. But if you use your private car, only the mileage allowance applies. The VAT on car park costs is sometimes deductible. Always keep receipts carefully and process everything carefully in the accounts. This way, you ensure orderly accounting!
