A lot of work can be done online so the popularity of workstations and remote working is growing. A temporary workplace in the sun, with a beautiful view or in nature sounds very attractive. Especially if you can write off the costs as a self-employed person or company. But what about the financial aspects of a workation, and what is tax deductible? In this blog, we dive into the tax rules.
Please note that this is a short-term workation, i.e. temporary remote work, and not permanent work from abroad.
Financial aspects of a workation
A workation involves performing your work from a location other than your usual workplace, usually a destination you would normally visit for vacation. This can range from a nearby city to an exotic destination abroad. The goal is to combine productive work with relaxation and new experiences. As a result, it has a so-called mixed character and is not entirely a business trip.
Whether a workation is considered business travel by the Belangdienst is considered and assessed by them on a case-by-case basis. In any case, the trip must be at least 50% business to put expenses on business. It is not enough if you yourself needed some extra sunshine or a change of scenery. The expenses you incur must make sense for your business and your operations. As an architect you may need to visit a construction project in Germany, for example, but as a hairdresser you cannot justify a visit to a theater performance in Spain.
When planning a working vacation, there are several costs to consider:
- Transportation: airline tickets, train tickets, rental cars, and local transportation.
- Accommodation: Hotels, apartments, vacation homes, or other lodging.
- Work-related expenses: Internet costs, co-working spaces, and possibly additional equipment or office materials.
- Daily expenses: food, drinks and recreational activities.
What is tax deductible?
Whether a particular expense is tax deductible depends on the nature of your work and the tax rules. Deductions are attractive to reduce the profit from your business, so you pay less tax. There are deductions available for workation, but not everything is deductible just like that. There is also a threshold amount, which you must be above. Here are some general guidelines for Dutch taxpayers:
Transportation costs
- Business travel: If the travel is necessary for your work, such as for a business meeting or conference, the transportation costs are deductible.
- Combination travel: If your trip serves both a business and a personal purpose, you must split the expenses proportionately. Only the business portion is deductible.
Accommodation
- Workplace: If your accommodation serves as a temporary workplace and you can prove that you worked there substantially, the expenses are (partially) deductible.
- Split: As with transportation expenses, you must make a reasonable split between business and personal expenses.
Work-related expenses
- Internet and work spaces: Additional expenses for internet and renting co-working spaces are deductible if they are necessary to perform your work.
- Equipment and materials: Purchases of additional equipment, such as a folding laptop stand or small keyboard, are deductible if you need them for work.
Daily expenses
- Food and drink: Generally, expenses for food and drink during a workation are not deductible unless they are business lunches or dinners.
- Recreation: If you go on outings at your new destination, these expenses are for your own account and not business deductible.
So if you are trying to book your vacation away with your lover as a workation you are not going to succeed. But if you have to make a work trip and have a business lunch in the process you can. Keep in mind that only the business part of your workation is deductible. If you go on a local jeep safari after that business lunch, that is private and is at your own expense.
More information on this and the current threshold amounts in 2024 can be found on the Tax Office website.
Documentation and evidence
Tax authorities require clear documentation to substantiate deductible expenses. Therefore, keep your receipt and any invoices well. Keep track in your calendar of when you work and write down your working hours accordingly. It is essential to keep a reasonable and defensible split of business and personal expenses. Business emails and minutes are also important as evidence. The more evidence you have, the stronger you will be if any audit takes place.
Since remote working is still a relatively new trend, sometimes the necessary guidelines are still lacking and some situations are in a gray area. Consult a tax advisor to make sure you meet all legal requirements and don’t miss out on potential deductions.
Remote working and tax matters
In the blog Remote work and taxes, tax expert Anjo Bots explains that it is essential to determine in which country you are tax resident, which is usually where you live, work and conduct your social life, because that is where you pay your taxes. If you commute internationally or work from abroad for an extended period of time, things get complex: deregistering from the Netherlands does not automatically mean you no longer have Dutch tax obligations, and working from another country can lead to local tax and social contribution obligations. In addition, she warns against “paper emigrations” and stresses that you can avoid double taxation through treaties, but they do not always provide sufficient protection. Plan carefully and get advice in advance and read all the tips in the blog.
As cheap as possible on workation
In short, there are quite a few ways to make your workation as financially attractive as possible. A workation can be a great way to combine work and leisure, but it is important to fully understand the financial and tax aspects. By planning carefully and keeping proper documentation, you can make the most of your workation while complying with tax regulations. In addition to the tax aspects mentioned in this blog, there are creative ways to even go on a workation for free! For this, read the following blogs:
- Free on workstation, it can be done
- Determine a workation yourself or have your boss (co)pay for it?
- Free on workation by house (animal) sitter
Do you think it would be great to be able to work remotely, but aren’t exactly sure how to go about it? No worries! The Remote Ready online course is here to walk you through the process step by step. Learn how to prepare your workation to perfection, discover the perfect destinations and get tips on how to stay productive while working from a beautiful location.
