Coffee, lunch and dinner as a self-employed person: what is deductible (IB and VAT) and how do you process this? – The Happy Financial

As a self-employed person, you regularly incur costs for coffee on the road, a sandwich during a job or a business lunch with a (potential) customer. Which costs are deductible, what are you allowed to do with VAT, and how do you process this neatly in your administration and tax returns? In this article you will get a complete, practical overview including clear examples and booking steps. Good to know: in 2025, the same main principles will apply to food and drinks as in previous years, with a current threshold for limited deductible costs.

Core rules at a glance

• Income tax (IB): costs for food and drinks are included limited deductible costs. You choose one of two methods every year:
  • 80/20 scheme: 80% of these costs are deductible (20% are not).
  • Threshold regulation: you only subtract what you exceed threshold of €5,700 (2025) spends. If you stay below it, there is no deduction.
• in brackets: the VAT on food and drinks that you in the catering industry consumes is in principle not deductible. You then book it gross amount as a cost and does not reclaim VAT. Separate rules apply to facilities at your own location; This is usually not the case for a one-man truck without employees.

What exactly falls under food and drink?

This category includes expenses such as coffee to go, breakfast/lunch/dinner during your working day, and business lunches or dinners with relations. This also includes refreshments during overtime and food during an event or conference. Please note: promotional gifts and receptions usually also fall under representation; the limited deduction then works the same.

Which method do you choose for the IB: 80/20 or threshold?

As a self-employed person (IB entrepreneur) you choose one method per year for all your limited deductible costs, including food and drinks:

1. 80/20 scheme
   You deduct 80% of the total limited deductible costs. Simple and predictable. For most self-employed people this is the most practical option.
2. Threshold regulation
   You only subtract the part above the threshold. This threshold is for 2025 €5,700. Only when your limited deductible costs exceed this amount are the excess deductible. This method can be interesting if you a lot spends on representation and food/drink.

Calculation examples (IB) with coffee, lunch and dinner

Example 1: sporadic business lunches

Situation: you incur €1,000 in costs for food and drinks in 2025 (including non-deductible VAT from the catering industry).

• 80/20: deductible = 80% × € 1,000 = €800 (non-deductible €200).
• Threshold: total costs are €1,000 under €5,700 → no deduction.

Conclusion: Choose 80/20.

Example 2: many customer dinners and event catering

Situation: you will make €7,000 in food/drink/representation in 2025.

• 80/20: deductible = 80% × € 7,000 = €5,600.
• Threshold: deductible = €7,000 − €5,700 = €1,300.

Conclusion: 80/20 provides a higher deduction (usually also preferred for self-employed persons).

Example 3: extremely high representation

Situation: you incur €20,000 in limited deductible costs (for example large-scale events).

• 80/20: deductible = 80% × € 20,000 = €16,000.
• Threshold: deductible = € 20,000 − € 5,700 = €14,300.

Conclusion: Here too, 80/20 is usually more favorable. The threshold method only wins when expenses are exceptionally high.

btw: what is allowed and what is not?

A stricter line applies to VAT than to IB:

• Catering on site: the VAT on food and drinks that you consumes in the catering industry is not deductible. You book the full voucher amount as costs and do not reclaim any VAT.
• Catering in specially equipped areas: VAT is also not deductible for meals provided by the caterer in a specially equipped space (such as a rented room).
• Office facilities and staff: own rules apply to staff with a threshold of € 227 per person per year for staff benefits. If you work solo and buy coffee/tea for your own workplace, VAT deduction is rarely beneficial in practice. Keep it simple: do not reclaim catering VAT; supermarket groceries for own consumption are normally part of the limited deductible category in IB and usually do not result in a structural VAT refund.

This is how you book it in your administration

The goal is to be able to easily make the IB correction at the end of the year and not to reclaim VAT during the year that you have to correct later. This is how you go about it:

1. Create an expense account “Limited deductible expenses (food/drink/representation)” in your ledger. Book all catering, lunches, dinners and relational meals here.
2. VAT treatment: in the catering industry, you post the full receipt (including VAT) to this expense account you do not reclaim VAT. For mixed receipts (e.g. room rental) you split the items: catering items without VAT refund; other taxable items with normal VAT deduction if they do not fall under food/drink.
3. Save context: note on the receipt who was there and the business purpose (“lunch with potential customer X, quotation discussed”). This helps with control and internal clarity.

How do you include it in your VAT return?

• Input tax (section 5b): take no VAT on catering vouchers. If VAT is stated on the receipt, it will remain in the cost price. So you do not count that VAT in 5b.
• Corrections: because you do not reclaim catering VAT, no corrections are necessary later. Less hassle, and exactly what the tax authorities expect.

How do you process it in your income tax return?

Your administration contains the following during the year gross amount of all food and drinks on the “Limited deductible expenses” account. When drawing up your profit calculation, you apply the chosen method:

1. 80/20 method: calculate 20% of the annual amount as non-deductible and correct this in your profit calculation (or via a separate item “non-deductible costs”).
2. Threshold Method: compare the annual amount with € 5,700 (2025). Only the excess is deductible; You rebook the part up to and including € 5,700 as non-deductible.

Many accounting packages have a special category of “limited deductible expenses”. If you choose 80/20 at the beginning of the year, stick to that line over the whole year on for consistency.

Practical mini decision tree

1. Was the food/drink consumed on site in the catering industry or by a caterer in a specially equipped room?
   Yes → VAT not deductible; record gross amount as “Limited deductible costs”.
   No → continue to 2.
2. Is it a regular personal consumption during work (sandwich on the go, coffee to go), or a relationship/networking meal?
   Both are subject to limited deductibility for the IB. Book under “Limited deductible expenses”. In practice, VAT refunds are usually not applicable for drinks.
3. Do you choose 80/20 or threshold?
   Make the choice at the beginning of the year; for most self-employed people, 80/20 is the simplest and often the most affordable.

Common mistakes and how to avoid them

• Put catering VAT in 5b. Don’t. You do not reclaim catering VAT, so do not include anything under input tax.
• Using 80/20 and threshold interchangeably in the same year. Choose one method per financial year and stick with it.
• Keep receipts without explanation. After the appointment, write down who, what and why. Your future self will thank you.
• Book everything under general costs. Use a separate general ledger account for an overview and a quick IB correction.

Mini cases: this is how you book real receipts

Case A: lunch with potential customer in restaurant (€80 pin voucher)

in brackets: not deductible → nothing in 5b.
Booking: €80 on “Limited deductible costs (food/drink/representation)”.
IB: counts in the 80/20 or threshold calculation.

Case B: coffee to go during travel day (€ 4.50)

in brackets: practically impossible to ask for back; book gross amount as costs.
IB: falls under limited deductible costs.

Case C: conference with catering in a rented room

in brackets: no deductible on catering (specially equipped room). Other conference costs (such as entrance) may be VAT deductible if they are directly business related.
IB: catering part = limited deductible costs; entrance fees, etc. are normally deductible for business purposes.

Checklist to make it easy for yourself

• Create one expense account for limited deductible expenses.
• Do not reclaim catering VAT; book gross amounts.
• Write down on each receipt: with whom and why.
• At the beginning of the year, choose 80/20 or threshold and stick with it.
• Let your accounting package do the calculations with a report or tag “limited deductible”.

Set money aside and avoid mistakes

Do you want to organize this tightly and avoid surprises when filing your tax return? These tools fit perfectly with this topic:

Frequently asked questions

Can I eat and drink? At home deduct if I work from home?
In principle, personal consumption falls under limited deductible costs and usually does not yield anything for VAT. Only book them if there is a clear business need and keep it businesslike.

What if I order alcohol during a business dinner?
The catering VAT remains non-deductible. In the IB, everything counts as limited deductible expenses.

Can I switch between 80/20 and threshold mid-year?
No. Make one choice per year and add it consistently.

Summary

Coffee, lunch and dinner are usually for self-employed people limited deductible for income tax. In 2025 you choose between the 80/20 scheme (usually favorable and simple) or the threshold scheme with a threshold of €5,700. The following applies to VAT: do not reclaim catering VAT; record the gross amount as costs. With a separate general ledger account and consistent choices at the beginning of the year, you prevent mistakes and loss of time. Finally, record your reservations immediately so that your liquidity changes with your fiscal reality.

Get started right away

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