There is a problem with the category called “costs of obtaining income” (KUP). There is no catalogue of goods and services that can be entered in it. Everything depends on the decision of a specific entrepreneur and… an official who can question the items entered by us in KUP. Additionally, the regulations change from year to year, which does not make it easier to navigate their thicket. Can we include renovations or car trips in KUP, and on what terms?
Can apartment renovation be included in tax-deductible costs?
You can. Under certain conditions. The first and unquestionable one – in order to include the renovation of an apartment in the costs of obtaining income, we must conduct our business activity there. Of course, it is not only about the factual state, but above all the legal one – our company must be registered at this address.
Many of the actions we want to take regarding a property that is both our apartment and our company headquarters depend on whether it is listed as a fixed asset of the company or not. Fortunately, this does not apply to renovations – we can put it in the KUP regardless. However, it is important to have full, indisputable and complete documentation regarding renovations.
Let’s remember that in order for officials not to be encouraged to look for any hooks on us, it is worth using full transparency. Separate and mark in the documentation a specific area of the apartment designated for work, or even install separate meters and modify the tariff with the electricity operator. This will also be helpful in calculating what part of the use of media qualifies as KUP.
Returning to the renovation – in addition to detailed documentation and a clear declaration that we are conducting business in this particular apartment (if we do not indicate this, we cannot include renovation expenses in the KUP), we must remember one more thing. If the apartment is a fixed asset belonging to the company, the renovation cannot include reconstruction, extension, reconstruction, adaptation or modernization. These are treated not as renovation, but as improvement. So what can we do “for the company”? Paint the rooms, replace the floor, replace installations, doors and windows.
Can travel by private car be included in tax deductible expenses?
Similar to above: you can. But under certain conditions. If we want 100% of our work-related travel and related operating costs to be recognized as a cost of earning income, we are required to use the car exclusively for business purposes and be able to prove it. How? By keeping records of kilometers traveled.
If we don’t feel like messing around with such records, we can still enter 75 percent of the vehicle’s operating costs into the costs of obtaining income. However, there is one condition – the car must be part of the company’s fixed assets. And this, in the case of a sole proprietorship, when the company is only “ours” anyway, seems to be the most reasonable solution.
But what if, for some reason, we do not want to include our car as a company fixed asset? It is still possible to “expense” the fees for its use. The legislator assessed that in such a case we are entitled to a deduction of 20% of the incurred expenses.
It is important to remember that the cost of obtaining income is… the cost of obtaining income. Actual and documented. If we do not try to circumvent the law and pay lower taxes, although we are not entitled to it at all, no official should have a problem with the points we entered in the KUP.
