In business accounting, VAT-deductible expenses are those business-related expenses for which you can deduct the VAT paid on purchases from your VAT liability on sales. In practice, this means that VAT on purchases related to business activities can be credited, provided that the receipts and supporting documents are in order in the accounting.
How does the VAT deduction work?
When a customer pays you for a product or service, the value added tax included in the price must be paid to the Tax Administration. At the same time, you are entitled to deduct the VAT paid on purchases when the purchases are directly related to your business. Truster VAT returns and reporting deductions on your behalf when you submit accounting documents.
What kind of receipt is valid for VAT deduction?
A receipt or voucher entitling you to a VAT deduction must contain the following information:
- VAT breakdown: Unit price, tax amount, and tax rate used.
- Seller information: Seller's name, address, and business ID. The business ID is mandatory.
- Business connection: The purchase must be related to business activities. For example, work equipment and office supplies are deductible, but your own lunch is not.
- Identification: Date of purchase and description of goods or services purchased.
An extract from online banking or a payment receipt alone is not usually sufficient as a VAT receipt, as they typically lack the seller's business ID and the tax rate used. All receipts and supporting documents must be retained for the period required by law in case the tax authorities request them at some point.
For more information on VAT deductions and receipt requirements , please visit the Tax Administration website.
