Expenses Recognized in the Income Statement

Recognized expenses in the income statement are not just numbers – they are a strategic tool for optimizing business operations and achieving tax benefits. Below is an overview of the key expenses that are tax-deductible and guidance on how to manage them properly.

1. SALARY AND COMPENSATION COSTS

If you pay salaries, author’s fees, or compensation under service contracts, these costs are recognized as tax-deductible expenses only when they are actually paid. Therefore, it is important that payments are made regularly and on time.

2. DEPRECIATION

Fixed assets (equipment, vehicles, computers, etc.) lose value over time, and this loss is legally recognized as an expense.

• Depreciation rates range from 2.5% to 30%, depending on the type of asset
• Assets with a value of up to 300€ are recognized immediately as an expense

Depreciation is an effective way to reduce the tax base while your company continues to use the acquired assets.

3. DONATIONS

Donations are recognized as expenses:

• up to 3.5% of total revenue
• up to 5% of revenue if paid to national sports federations

To be recognized, donations must be made to legal entities engaged in the activity for which the donation is intended (non-governmental organizations, educational institutions, sports clubs, cultural and religious organizations, etc.).

This is an excellent opportunity to contribute to the community while benefiting from tax incentives.

4. REPRESENTATION AND MEMBERSHIP FEES

• Representation expenses (business lunches, meetings) are recognized up to 1% of revenue, provided they are properly documented and justified
• Membership fees paid to chambers, associations, and unions are recognized up to 0.1% of revenue
• Membership fees that are legally mandatory are recognized in full

5. WRITE-OFF OF DOUBTFUL RECEIVABLES

Doubtful and uncollectible receivables may be recognized as an expense, but only under certain conditions:

• they must have been previously included in revenue
• attempts to collect the receivable must be documented
• decisions or documents confirming uncollectibility must exist

Proper write-off of such receivables helps avoid unnecessary increases in the tax base.

6. PROVISIONS AND IMPAIRMENT OF ASSETS

If an asset loses value due to damage, disposal, or write-off, the related expense is recognized in the period in which the event occurred.
It is essential to have proper documentation (records, reports) confirming the loss of value.

Expenses should be viewed as a tool for business optimization, not merely as a cost.

Our agency Perfectum provides professional support in accounting and tax advisory services. We ensure the legality, accuracy, and timeliness of all reports, allowing you to focus on what you do best – managing and growing your business.