VAT Deduction Guide for Home Office: How to Optimize Living and Working Expenses?

ByMateusz

For IT professionals working remotely from a home office, distinguishing between personal and business expenses is crucial. VAT deduction is only possible for those costs that are directly related to the business activity.

VAT Deduction for Workspace-related Expenses
You can deduct the full VAT from expenses related to the workspace (Home Office) at home. List of example expenses:

  • Air purifier;
  • Furniture: desk, chair;
  • Printer;
  • Flowers.

VAT Deduction for Whole House Expenses, Utility Bills.

When an expense concerns the entire apartment, a proportion of the area used for professional purposes to the total apartment area is applied to determine the allowable deduction amount.

Example:

  • The apartment is 80 m2.
  • The size of the Home Office room, for example, 20 m2,
  • The size of the remaining rooms, for example, 60 m2.
  • The area used for business purposes is 20m2 out of 80 m2 = 1/4 = 25%.

Therefore, the entrepreneur will be entitled to deduct 25% of the VAT on costs related to the apartment.

Summary: It’s important to track expenses, properly document purchases, and be mindful of the limitations arising from mixing the private sphere with the professional.