Tools

If you acquire work equipment and maintain it yourself (tools, machines and devices), you can deduct the costs.

You can deduct

  • the acquisition cost of the equipment
  • maintenance costs
  • repair costs.

How to report tools as expenses for the production of income

The purchase and maintenance costs of tools acquired for work purposes can be deducted as expenses for the production of income

If you have bought or repaired tools you need for your work, you can deduct the costs as expenses for the production of income. When you report costs on your tax return, remember to specify how they relate to your work.

You can also deduct the maintenance and repair costs for tools, in addition to the acquisition price.

The purchase price of a tool is under €1,000

If the purchase price of a tool you have bought is under €1,000, you can deduct the entire price in the tax assessment of the purchase year. Maintenance expenses are also deducted in the year when they were paid.

The purchase price of a tool is over €1,000

If the purchase price of a tool is over €1,000 (and its economic life is over three years), the purchase price is deducted as annual depreciations. The depreciation is made separately for each tool, and the maximum depreciation is 25%. In the first year, you can deduct 25% from the purchase price and after that 25% from the undepreciated acquisition cost.

Reimbursement for tools paid by the employer

If your employer has paid you reimbursements for expenses that have arisen from your work, these reimbursements are not treated as wages if they do not exceed the specified or estimated cost amount. Therefore, the employer does not need to withhold tax on the reimbursement. Even if the reimbursement is not treated as wage income, it can still be taxable income.

This reimbursement cannot be deducted as a deduction for the production of income, as the deduction is based on the actual expenses.

Example: Peter has acquired work tools for €800 and received a €500 reimbursement from his employer for the tools. The €500 reimbursement paid by the employer is taxed as Peter’s earned income, as the reimbursement has not specifically been prescribed as a tax-exempt income. Peter reports his tool costs on his income tax return as expenses for the production of income and presents an itemised specification of the costs and how they relate to the production of income. Peter can deduct the costs according to the actual expenses (€800).

 How to claim a deduction for the production of income