Study costs – business or private?
Your company is running smoothly and you want to broaden your professional knowledge by following a course or study. Or maybe you want to get an education to completely change your career path. Is it possible to just enter these costs in your bookkeeping? Or do you have to take certain rules into account?
Business study costs
The tax authorities say that all costs that you incur in the business interest of your company are deductible from your profit. So if you’re a photographer and you’re following a photo editing course, this is in the interest of your company. After all, the product you offer will benefit from this. And for instance as a yoga teacher you’ll probably also be working constantly to keep your knowledge up to date by means of training and education.
Study costs that you incur to keep your professional knowledge up-to-date can therefore be reported as business costs in accounting. There are few restrictions in this regard, as long as the costs are necessary for your study. For example, think of:
- Course or tuition fees
- Textbooks or software
- Mandatory materials
- Travel costs or accommodation costs
You may also deduct the VAT on these expenses in the VAT return. In addition, you can include the business study hours for the hours criterion, which you have to meet to profit from the entrepreneurial deductions. So all together studying can be a nice way to grow both your knowledge and company and to lower your profit for taxes.
Study costs for your personal development
But what if you’re a yoga teacher taking a photography course? Then the Tax and Customs Administration does not regard the course fee as business costs. Not even if you photograph your participants after the yoga class. These are costs that you incur for your personal development. But there is a distinction made in whether this is intended for a hobby or for a future new profession.
Costs that you incur for a hobby, will have to be paid out of your own pocket. If the study costs are for a future profession or position, then you may be able to use them in your income tax return. However, there are some more restrictions: you can only specify mandatory costs. There is a threshold amount of €250 and the VAT cannot be reclaimed.
Changes as of January 1, 2022
Do you want to deduct study costs in your income tax return? Then 2021 is the last year in which you’re allowed to do this. As of January 1, 2022, the deduction for study costs will expire and a subsidy scheme will be introduced instead: the STAP-budget. You can apply for this budget from 1 March 2022 at the UWV.
Nothing will change for entrepreneurs who meet the conditions to report the study costs in their accounts.
There can be different reasons for taking a course or study. Sometimes it can be difficult to determine whether this is business related or not. In the case of study costs, there is certainly a grey area. If you’re not sure whether the study costs in your case are business or private, please contact the tax authorities or your accountant before you hit the books.