Deductible expenses for self-employment

To determine income from self-employment, costs that are business-related or professionally justified can be deducted. In principle, all costs necessary for generating self-employment income can be deducted (e.g., personnel and rental costs). Exceptions are regulated by law.

Deductible costs have a decisive influence on the determination of income from self-employment (see blog post). According to Art. 27 Para. 1 DBG, only business-related or professionally justified costs can be charged to the profit and loss account. Para. 2 of Art. 27 DBG specifically mentions the following costs:

• Depreciation and provisions
• Realized and recorded losses on business assets
• Contributions to pension schemes for one's own staff, provided that any improper use is excluded
• Interest on business debts as well as interests on participations in corporations amounting to 20% or more

For example, in the Canton of Aargau, the following are considered business-related expenses: cash and in-kind wages to business personnel, rent for business premises, interest on business debts, and car costs. In principle, all expenses related to self-employment and necessary for generating these revenues are deductible. Explicitly non-deductible are payments of bribes to Swiss or foreign public officials (Art. 27 Para. 3 DBG).

In accounting, a strict distinction must be made between business-related expenses and expenditures for private needs of the self-employed. The latter must not be booked as an expense account but must be charged to the private account as a private withdrawal (Mäusli-Allenspach/Oertli, Swiss Tax Law, 2010, p. 104). These costs are regulated in Art. 34 DBG and include in particular the income and wealth taxes of the taxpayer.

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