If you acquire and maintain work tools yourself (tools, machinery and equipment), you can deduct the expenses incurred.
The following are deductible:
- acquisition costs
- servicing costs
- repair costs.
Tool purchase and servicing expenses can be deducted as expenses for the production of income
If you have bought or serviced tools that you require for your work, you can deduct them as expenses for the production of income. When you claim expenses in your tax return, also provide a statement on how they are related to your work.
In addition to the purchase price, you can deduct tool servicing and repair expenses.
Tool purchased for less than EUR 1,000
If you purchase a tool for less than EUR 1,000, you can deduct it in full in the taxes for the year of purchase. Maintenance expenses are also deducted in the year in which they were paid.
Tool purchased for more than EUR 1,000
If a tool was purchased for more than EUR 1,000 (and it has a useful life of more than three years), the purchase price is deducted through annual depreciation. Depreciation is carried out for each tool and in a maximum amount of 25%. You can deduct 25% of the purchase price in the first year and 25% of the residual value thereafter.
Tool compensation paid by the employer
Any compensation paid separately by the employer for work expenses is not considered to constitute wages if the compensation does not exceed the assessed or estimated expenses. Such compensation is thus not subject to withholding by the employer. Even if the compensation is not considered to constitute wages, it may nevertheless be taxable income.
You cannot claim this compensation as a deduction for the production of income, because the deduction is granted according to actual expenses.
Example: Pekka has spent EUR 800 in acquiring tools for his work and has received EUR 500 in tool compensation from his employer. The EUR 500 in tool compensation paid by the employer is taxed as earned income for Pekka, as the compensation has not been separately decreed as constituting tax-exempt income. Pekka claims the tool-related expenses in his tax return as expenses for the production of income and provides an itemised statement of the expenses and how they are related to the production of income. Pekka is entitled to deduct the actual expenses in his taxes (EUR 800).