Restaurants, receptions, gifts, cars, fines: what you can deduct for income tax and VAT. Updated on 28 October 2026.
A business expense is not always 100% deductible. For corporate income tax, the non-deductible part is called a disallowed expense (DNA): it is added back to taxable profit. For a self-employed sole trader the logic is similar: these costs are only partly deductible.
VAT follows its own rules. An expense can be partly deductible for income tax but give no VAT recovery at all. In that case the unrecovered VAT becomes part of the cost and follows the same income-tax deduction percentage.
| Expense | Deductible for income tax | Note |
|---|---|---|
| Restaurant costs | 69 % | 100% for staff travelling at least 6 hours away from the business |
| Reception costs | 50 % | 100% for certain promotional event costs (trade fairs, open days, launches) |
| Business gifts under €125 | 50 % | Promotional items bearing the company name: 100% |
| Business gifts over €125 | 100 % | To be reported on a 281.50 form in the recipient's name |
| Non-specific work clothing | 0 % | Only specific work clothing is deductible |
| Fines and penalties | 0 % | Except traffic fines treated as a benefit in kind for the employee |
| Corporate income tax and regional taxes | 0 % | Withholding tax on real estate and municipal and provincial taxes remain deductible |
| Social benefits | 0 % | Except coffee, soup, drinks and fruit offered to staff during working hours |
| Abnormal or gratuitous benefits, gifts | 0 % | |
| Company car benefit in kind | 17% of the amount as DNA | 40% if the company also pays for private fuel (fuel card) |
Deductibility depends on the engine and on the date of purchase, lease or rental. For companies, the rules are becoming much stricter for combustion-engine cars:
| Car | Deductibility of costs (corporate income tax) |
|---|---|
| Combustion car bought before 1 July 2023 | CO₂-based formula: between 50% and 100% (40% if 200 g/km or more) |
| Combustion car bought from 1 July 2023 to 31 December 2025 | Maximum 75% (tax year 2026), 50% (2027), 25% (2028), then 0% (2029) |
| Combustion car bought since 1 January 2026 | 0 % |
| Electric car bought before 1 January 2027 | 100 % |
| Electric car bought from 2027 | 95% (2027), 90% (2028), 82.5% (2029), 75% (2030), then 67.5% |
| Plug-in hybrid: fuel | In principle maximum 50%, then gradually reduced depending on the purchase date |
Calculate your case: our company car BIK and DNA calculator gives you an estimate in seconds.
For a self-employed sole trader the rules are not exactly the same: we check your situation before you buy or lease a vehicle.
| Expense | Recoverable VAT | Note |
|---|---|---|
| Car (purchase, lease, fuel, maintenance) | Maximum 50% | Depending on actual business use; light commercial vehicles follow other rules |
| Restaurant | 0 % | Except staff on assignment outside the business, and re-invoicing |
| Reception costs | 0 % | 100% for activities that directly promote sales (trade fair stand…) |
| Accommodation, food and drinks for third parties | 0 % | Limited exceptions only |
| Spirits and tobacco | 0 % | Even when given as gifts |
| Business gifts | 100% if under €50 excl. VAT | One gift per business relation per year, no tobacco or spirits |
| Staff gifts | 100% if under €50 excl. VAT | Given to all staff, one per person per year |
| Social benefits | 0% (individual) | 100% for collective benefits (coffee, fruit…) |
| Mixed private and business expenses | Business share | According to actual use |
| Exempt activities or small business scheme | 0 % | Mixed taxable person: pro rata deduction |
A question about an expense? Contact us: we tell you what is deductible before you commit to the expense.
General information. Sources: BDO, "Key figures corporate income tax: disallowed expenses" (August 2026), and current VAT rules. It does not replace advice tailored to your situation.
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