Home office expenses in a sole proprietorship

What costs can be included?

All costs related to using the apartment for business purposes, for example: rent, repairs, furnishings, maintenance costs, interest on a mortgage for purchasing the apartment, utility bills (water, electricity, gas).

All costs are included proportionally to the extent the apartment is used for business activities. If 20% of the apartment is designated for sole proprietorship purposes, we will include 20% of the expense as a cost.

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Conditions:

• A declaration from the entrepreneur about allocating a part of the apartment for sole proprietorship purposes (typically 20% to 50%).
• The address must be registered in CEIDG. It does not have to be the main place of business activity; it is sufficient for the apartment to be indicated as an additional place of business activity.

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As an accounting office, we should receive:

• A declaration from the entrepreneur about allocating a part of the apartment for sole proprietorship purposes (typically 20% to 50%).
• The address must be registered in CEIDG. It does not have to be the main place of business activity; it is sufficient for the apartment to be indicated as an additional place of business activity.

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Potential problem – higher property tax.

For the apartment owner, conducting sole proprietorship activities in the apartment may mean the obligation to pay higher property tax.

However, according to the judgment of the Supreme Administrative Court (NSA) of August 11, 1992, ref. SA/WR 650/92, „the higher rate applies to the area designated exclusively for sole proprietorship purposes” and further, according to the judgment of the Provincial Administrative Court (WSA) of January 15, 2013, ref. II FSK 933/11, „those parts of the building that are used (occupied) for residential purposes cannot be considered as occupied for business activities.

Regarding property tax, to avoid a higher property tax, it may become necessary to demonstrate that a designated part of the apartment is not exclusively used for business activities.

If a room is designated exclusively for business purposes, for example, an office, the apartment owner is obliged to pay a higher tax rate.