Deductions for costs before business start

If you have made purchases before your business has officially started, you can deduct the costs under certain conditions. To be eligible for deductions, the purchases must have been made during the calendar year the business started or the year before. If you registered the business sometime in 2023, you can make deductions for costs incurred as early as January 1, 2022.

The costs must also be related to your business. In other words, these costs should represent expenses that would be eligible for direct deduction if they had been incurred after the business had started. Depending on the specific nature of your business, approved purchases may include:

• Domain names

• Consumables

• Office supplies

• Printers

• Various tools

It is worth noting that the costs for forming and register the business are not deductible expenses.

Deducting VAT before business start

The rules regarding VAT deductions on purchases are stricter than for cost deductions. VAT deductions can be made if the purpose of the purchases was exclusively for use in the business and not for private use. Therefore, it is not possible to deduct VAT for a good or service that was previously used privately but is later used in the business.

When registering the business, you indicate the date of your first purchase as the start date for VAT registration. It is important to keep the receipt or invoice from the purchase.

Transferring private assets to the business

If you have acquired an asset for private use that you later want to use in the business, there is a possibility to integrate it into your business activities. When doing this, the asset should be valued at market value, which is the price of the asset on the day it is transferred to the business. After this, you are entitled to make deductions in accordance with depreciation, where the cost is spread over the asset's useful life.

VAT deductions cannot be made in this case. If you continue to use the asset privately, you may be taxed for it.