Why a company phone?
A separately used device or subscription can make it easier to substantiate business expenses. The tax deduction depends on actual usage, purchase and the VAT situation. Merely having “business” on an invoice or subscription does not automatically grant a full deduction.
Advantages
- You pay less tax because business expenses reduce your profits.
- You can reclaim VAT from business use.
- Your administration remains clear by separating private and business.
- You work more professionally with a phone you actually use for your business.
Reclaiming VAT on a new phone
VAT on the device may be deductible when it is used for taxable turnover and you have a suitable invoice. The invoice date determines the return period. Private use, exempt turnover and the small businesses scheme (KOR) may restrict or prevent deduction. Substantiate the allocation based on your usage; read the conditions for input VAT.
Income tax deductions
Calculate using the costs excluding VAT that you can reclaim. Non-reclaimable VAT is part of the costs or purchase value, for example under the VAT exemption for small businesses (KOR). For multi-year use, purchase costs may be an investment rather than a direct expense.
Purchase lower than 450 euros
For a business purchase under €450, after deducting reclaimable VAT, you can generally process the business amount directly as expenses. Non-reclaimable VAT can actually push the purchase above this threshold.
Purchase from 450 euros
For devices costing €450 or more and used for more than one year, you generally depreciate the device. Calculate this using the purchase price, expected residual value and useful life; the annual depreciation is capped at 20% of the purchase price. Example: a business-use-only telephone costing €800, with a residual value of €200 and a useful life of five years: (€800 − €200) / 5 = €120 per full year. If the device is put into service at a later date, you should calculate the proportionate amount. See the rules for depreciation.
Private use of business phone
If you also use a business phone privately, you have to take that private part out of the costs. Private use is not part of your business expenses and is therefore not deductible. You estimate how much you make private calls or use data and take that part out of the deduction. This works the same for VAT. If you have deducted all VAT and you also use the phone privately, you must make a correction later. This keeps your records correct and you only process business expenses in your accounts.
Transferring private phone to business
If you already have a phone that you initially bought privately, you can still contribute it to your business. You then transfer the phone to your business at its current value. From then on, you can deduct business expenses such as depreciation or usage costs. You cannot reclaim VAT because you are not making a new business purchase. This works well if you use the phone mainly for business purposes from now on. This way, the phone enters your business assets and you can process it correctly for tax purposes.
Private phone business use
You can continue to use your private phone for your business. You can, but the rules work differently. The tax authorities look at the distinction between the subscription and use. The subscription remains private and you may not deduct it. You may deduct the business use. This way, you only process the costs that belong to your business. This works well if you use the phone partly for business and partly for private use.
Telephone subscription
A private phone subscription is not deductible. The monthly cost remains completely private, even if you make business calls. Only actual business use counts.
Business part deduction
Substantiate your business use with call data and a representative measurement period, for example. A fixed percentage is not a generally accepted safe standard. Do not simply deduct a percentage from all private expenses: fixed costs for a private phone contract and business call costs are treated differently.
Phone subscription deduction
A business phone subscription in your company's name is deductible to the extent it is business. Private use you leave out so that the deduction is correct. A private subscription remains private. You may only deduct business use, such as calls or data for your company. This keeps your accounts clear and ensures that your costs are correctly processed.
Business
You can deduct a business phone subscription for the part you use for business. You leave the private part out of the costs. You deduct the VAT only on the business use.
Private
A private phone subscription remains private. You may only deduct business use, such as calls or data for work. The fixed monthly costs remain entirely for your own account.
Keep the invoice, date of purchase and substantiation of use. Also check the laptop example and the rules for working from home expenses.
