Being an accountant for expats in Denmark is a lot of fun, especially when it’s time to go through the deductions.
Over the years, I’ve heard some truly creative arguments for why something should count as a business cost. Here are a few of my favourites:
The hair salon owner:
Me: “You can’t deduct cat food.”
Them: “But having a cat makes my clients happy.”
Happy clients are good for business, but the cat is a pet. In Denmark, an expense is deductible when it’s directly connected to earning your business income. A pet that happens to live in the salon is still a private cost.
The personal trainer:
Me: “A Netflix subscription is a personal cost.”
Them: “I watch documentaries about muscles. It’s research.”
Streaming services are used privately by nearly everyone, so SKAT treats them as private. The same goes for newspapers and magazines that aren’t specific to your field.
The construction company without an office:
Them: “Can I deduct a sofa?”
Me: “You don’t have an office!”
Them: “But when I sit on it at home, I make work plans.”
Furniture in your private home is private, even if you think about work while sitting on it. A home office is deductible only when the room is used for business alone. A living room with a sofa and a TV doesn’t qualify.
The designer:
Me: “Summer dresses from H&M are not work clothes. They’d have to have your company logo on them.”
Them: “But I have to look good when I’m out. Who knows which opportunities come up?”
Clothes you can also wear privately are not deductible, however good they make you look at a networking event. Work clothes count when they’re unsuitable for private use, such as safety gear or uniforms, or when they carry a clearly visible company logo.
And my absolute favourite:
Them: “Can I deduct my divorce lawyer?”
Me: “No.”
Them: “But the marriage was affecting my productivity.”
Divorce costs are private. However much a marriage affects your output, the lawyer stays on your personal budget.
The rule behind all of these
There is one question to ask: did you spend this money to earn, secure or maintain your business income?
If the honest answer is “partly” or “well, sort of”, the expense is usually private. When in doubt, ask before you book it, not after SKAT asks you.
Keep your receipts,
Irina
