News
What happens to the administrator of an indebted company: legal risks and liability
31 May 2026
24 June 2026
Deductible expenses are the costs a business incurs in the course of its business and which can reduce the amount on which tax is calculated.
For an expense to be accepted for tax purposes, it must be directly related to the company’s business and supported by supporting documents. In practice, this means that a company can deduct expenses necessary for its operation, development, promotion or administration, provided it can demonstrate their economic purpose.
In 2026, attention to documentation and the way expenses are recorded is more important than ever. Invoices must be managed correctly through existing tax systems, and every cost must be explainable and justifiable within the context of the company’s business.
That is why entrepreneurs need to understand the difference between expenses that are fully deductible, those that are deductible only up to certain limits, and those that cannot be deducted at all.
Proper expense management contributes to the company’s tax optimisation and reduces the risk of subsequent adjustments in the event of a tax audit.
At the same time, it provides a more accurate picture of the business’s actual costs and profitability. For this reason, deductibility should not be viewed solely from a tax perspective, but as part of sound and efficient financial management.
The basic rule is simple. The expense must be incurred for the purpose of carrying out economic activity and generating income.
In addition to economic utility, supporting documentation is also required. Invoices, contracts, purchase orders, delivery notes or other documents supporting the purchase are very important for the tax recognition of the expense.
Depending on their tax treatment, expenses are divided into three categories:
Fully deductible expenses reduce the tax base in full. This category generally includes costs necessary for the operation of the business.
Partially deductible expenses are recognised only up to certain percentages or within the limits set by law. These include, for example, entertainment expenses or certain vehicle-related costs.
There are also expenses that do not affect the calculation of tax, even if they are incurred by the company. These are considered non-deductible for tax purposes.
To avoid misinterpretation, each expense must be analysed in the context of the company’s business. The same type of cost may be treated differently for tax purposes depending on how it is used and documented.
Most companies have a number of recurring costs that are fully deductible when they are justified and correctly recorded.
These include:
In many cases, external services represent a significant component of deductible expenses. For example, working with a tax adviser can help a firm apply the law correctly and avoid costs arising from misinterpretations of tax regulations.
The costs associated with digitising business operations also fall within the category of deductible expenses. Subscriptions to invoicing software, management software solutions, electronic signature certificates or cloud services used in day-to-day operations are generally recognised for tax purposes.
Marketing expenses have also become an important category. Google Ads campaigns, social media promotion, SEO services, advertising materials and the development of a visual identity may be deductible when they contribute to promoting the business.
There are categories of costs that are subject to limited deductibility. These must be monitored carefully to avoid exceeding the limit permitted by law.
One example is entertainment expenses. Business meals, certain gifts given to business partners or other hospitality expenses may be deductible within the limits set by the Tax Code.
Expenses relating to cars used for both business and personal purposes are generally 50 per cent deductible. This category includes fuel, maintenance, repairs, insurance and other costs associated with the use of the vehicle.
Social benefits provided to employees are also subject to special rules. Allowances granted in certain situations, gifts for employees or other social benefits may be deductible within the limits set out in the legislation.
Sponsorships are treated differently for tax purposes. They do not function as a standard deductible expense, but may generate a tax benefit through the tax credit mechanism, subject to the conditions and limits laid down by law.
In all these situations, proper documentation and the correct calculation of the limits are very important for applying the appropriate tax treatment.
The Tax Code also sets out a number of costs that do not reduce a company’s taxable base.
The best-known examples are:
Personal expenses are one of the most common sources of tax issues. If a cost cannot be linked to the business’s economic activity and does not contribute to its operation, its deductibility may be challenged.
Furthermore, purchases must be consistent with the company’s business purpose and its needs. In the event of an audit, the tax authorities may request explanations and documents demonstrating the economic utility of the expenditure in question.
Well-organised accounting records and ongoing collaboration with specialists in the field significantly reduce the risk of such situations arising.
Good financial management begins before the expense is incurred. It is recommended that every purchase be analysed in terms of its usefulness to the company and how it will be accounted for.
A few simple measures can make all the difference:
As the business grows, the volume of documents also increases. In these circumstances, organising and continuously monitoring expenses contributes to more efficient management of the company.
Accounting and consultancy services can help entrepreneurs better understand the tax treatment of different categories of costs and implement procedures that reduce tax risks.
In many cases, a check carried out before an expense is incurred is sufficient to avoid problems that might arise later.
Expense management is not just about reducing tax. It means better control over costs, more informed financial decisions and a true picture of the business’s performance.
When expenses are analysed, documented and recorded correctly, the company benefits both from the tax advantages provided for by law and from more efficient financial management.
For entrepreneurs wishing to grow their business sustainably, working with a business consultancy firm can provide support in both tax and accounting matters, as well as in the strategic decision-making process.
We help companies to properly understand their tax obligations, identify legal opportunities for optimisation, and build robust financial processes that support long-term business growth.
Site map
Legal
