A general expense allowance as a company director: the rules of the game in a nutshell
A general expense allowance as a company director: the rules of the game in a nutshell
August 2023 - As a company manager, you can include several specific flat-rate expense allowances from your company. Think, for example, of mileage allowances and daily and travel allowances. In addition, you can also allow yourself a general lump-sum expense allowance. How do you approach this correctly?
General expense allowance: tax rules
The same tax rules apply to a general expense allowance as to specific expense allowances. In principle, these allowances are flat-rate reimbursements of expenses proper to your company, making them tax-free. For your company, they are deductible, except for non-deductible or limited deductible expenses such as restaurant or fuel costs and provided the amount is stated on your sheet 281.20.
Tax authorities' agreement required
Legally, you may determine the amount of non-reimbursable expenses on a flat-rate basis. To do so, however, you need the agreement of the tax authorities. You can request a ruling in advance from the Office for Advance Decisions (DVB), although this step is not compulsory. A positive ruling is valid for five years and can be extended if desired.
What in the case of multiple companies?
Charging general expenses is possible with multiple companies you manage as a company director, although you obviously cannot charge the same expenses to each of your companies.
Which expenses are eligible?
In practice, a general expense allowance allows you to have all types of expenses reimbursed that you incur for your company that have not been reimbursed based on supporting documents or through a specific allowance. Office and communication, restaurant and entertainment expenses are common expenses through this scheme.
A specific home office allowance as applicable to employees is not an option for a company director. However, you can have home office expenses reimbursed through a general expense allowance. For example, the tax authorities accept flat-rate reimbursement for furnishing, maintaining and using an office, costs for heating, electricity, water and insurance, among other things.
Secondary car costs - or costs not covered by a mileage allowance - include costs for, for example, party tickets, car wash, taxi and tolls. Good to know is that this reimbursement also applies to privately incurred costs for a car belonging to your company.
Cost reimbursement calculation
It goes without saying that you must be able to justify any expenses incurred in writing. You do this by keeping a record of the expenses you have privately incurred for your company over a certain period - say three months - through supporting documents. At the end of that period, you add up all the expenses incurred and calculate an average per month, which you use as the basis for a year's lump-sum expense allowance.