Simple ways to withdraw money from a business tax-free

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Business owners and managers are constantly looking for legal and tax-efficient ways to withdraw money from their business. There are several ways to do this, but below we will highlight some simple and practical ways in which you can use your company's money tax-free.

Home Office Expenses

If you do work related to the company from home and there is a separate room for the office, then all expenses incurred in the office can be accounted for as 100% of the company's expenses. If there is no allocated space, then the costs must be divided in proportion to the cost of the entire home. If determining the proportion turns out to be difficult, the usual division is up to 50/50. Compensation is allowed for both utility costs and partial rent of the apartment, if it is paid. It is also allowed to reimburse the necessary tools and supplies purchased for the office. The costs of the home office are reimbursed on the basis of the document by decision of the board.

Compensation for a personal car

The company can reimburse up to 335 euros per month tax-free for trips made to perform work duties and the use of a personal car, but only on the basis of the driving diary. If the compensation exceeds the amount, the remainder is treated as wages and taxed accordingly. If the enterprise has made payments to an individual for the use of a car during a calendar year, he is obliged to submit a declaration INF 14 of the following year no later than February 1.

Daily subsistence allowance and other expenses related to the business trip

The employer has the right to send an employee (including a member of the management board) to perform his duties outside the workplace designated by the employment contract. If the employer and the employee do not agree on a longer period, the posting may not last more than 30 days. During the posting, the company pays the employee a daily allowance: up to 50 euros per day for the first 15 days, and then up to 32 euros per day. These daily allowances are tax-free. All expenses related to the business trip, such as accommodation, air tickets and expenses related to trade fairs and conferences, are also covered by the company. All expenses related to the posting will be reimbursed in accordance with the cost documents. For reimbursement of daily expenses and expenses, a posting order and a report on posting expenses are drawn up.

Trainings

Task-related training, including books, webinars, consultations and conferences, is tax-free provided that the company has a direct need for the training and/or it is necessary for the employee to perform his or her duties. These trainings and other educational activities may be tax-free for employees with employment contracts, members of the management board and managers of a non-resident permanent establishment.

Admission costs

Reception expenses are expenses incurred by the company related to the catering, accommodation, transportation or entertainment of guests or collaborators. Up to 2% of payments subject to social tax plus 32 euros per calendar month are tax-free from such expenses.

If the company does not make these expenses on a monthly basis, a larger reception can be arranged once a year, where unused tax benefits are summed up. Admission expenses must be declared in Appendix 5 to the TSD by submitting the declaration by the 10th of the month following the calendar month in which the admission costs were made.

The cost of health promotion

Expenditure to promote health and wellbeing, including health and sports expenses, is tax-free and reimbursed up to €100 per employee per quarter. An employee with an employment contract, a member of the management board, an official, an employee with a VÕS contract, as well as a self-employed person who sells goods to the employer for a longer period of time are considered employees. 100 euros are taken into account together with VAT and the basis for this reimbursement is an expense document. Health promotion expenses include participation fees for public sporting events, direct expenses related to the regular use of sports and places of movement, insurance premiums for a medical insurance contract and the services of a rehabilitation doctor, physiotherapist, clinical speech therapist or psychologist, provided that they are provided by a specialist in the relevant profession time. The aid paid must be declared in Part 3 of the INF 14 declaration for the following year.

Promotional gifts

The tax-free limit for gifts made for promotional purposes is 10 euros excluding VAT. The cost of promotional gifts must be declared in Appendix 5 to the TSD by the 10th of the month following the month of making the gifts. Documentarily certified gifts and donations are tax-free if they are made to non-profit organizations, foundations or religious associations listed by the Tax and Customs Board. In this case, the declaration is submitted by the recipient of the gift or donation himself.

Frequently Asked Questions

How to account for the cost of a home office if there is no separate office space?

The costs are divided in proportion to the cost of the entire home up to 50/50.

What is the maximum compensation for using a personal car?

The tax-free allowance is up to 335 euros per month if the driving diary is kept.

How long can a business trip last?

If the employer and the employee do not agree on a longer period, the posting may not last more than 30 days.

What training can be reimbursed tax-free?

All task-related training, books, webinars and consultations, if they are directly related to the performance of job duties.

How high are the admission costs that can be declared tax-free?

Up to 2% of payments taxed with social tax plus 32 euros per calendar month.

What health promotion expenses are tax-free?

Participation fees for public sporting events, expenses for the use of sports and exercise venues, insurance premiums for a health insurance contract and rehabilitation services up to 100 euros per employee per quarter.

Withdrawing money from a business tax-free may seem difficult, but there are actually several legal and easy ways to do so. Home office expenses, personal car compensation, daily allowances for posting and other business trip expenses, training, admission costs, health promotion expenses and promotional gifts are ways to use money from your business tax-free. It is important to keep proper records and submit the necessary declarations in a timely manner.

If you have any further questions, please feel free to contact us Feelfini with a team.