Consultancy expenditure tax deductible?

Are the costs made in order to fulfill your tax obligations tax deductible? The answer is not unambiguous.

Consultancy expenditure

Fulfilling all of your fiscal obligations is not easy. Even for completing a (simple) personal income tax return a lot of people require professional assistance. Inevitably the question rises: what about these costs? Are they tax deductible? Opinions are divided on this.

NO, says the minister of Finance, BECAUSE they are not made to obtain or keep taxable professional income. The essential condition for expenditure to be tax deductible, is therefore not fulfilled. Only for complex tax returns the minister leaves the door open.

YES, according to the majority of the recent case law, IF they are inherent to the professional activity. According to the Supreme Court this can also be the case for easy tax returns.

Regarding other costs you incur for tax and legal assistance (by an accountant, lawyer, tax consultant) the answer is clearer. These costs are in principle tax deductible. They may concern different obligations relating to your professional activity resulting from fiscal, social or company law: imagine your accounting, administrative and social security obligations.

Assistance during legal proceedings

When a dispute arises with the tax authorities, you need professional assistance. The fees paid to a lawyer representing you in a legal tax proceeding are, according to case law, tax deductible, since:

they necessarily relate to the professional activity (the fact that the dispute concerns professional income from the past is not relevant);

the complexity of the legislation justifies the deductibility;

in case the tax payer should act himself, he would lose an enormous amount of time by making the necessary preparations.