Travel expenses in the sole proprietorship

Often we are asked how travel expenses can be taken into account in a sole proprietorship. Read in our article which two options are available.

To represent the vehicle costs for the exercise of business activity in accounting, there are basically two options:

a) Vehicle remains in private ownership

If the vehicle is to remain in private ownership, all costs will also be paid privately. Alongside, a logbook can be used to record business trips (date, purpose of the trip such as meeting with customer XY, start and destination, kilometers). At the end of the fiscal year, the kilometers can then be transferred to the accounting at the rate accepted in the respective canton (max CHF 0.70 / km).

‍Calculation example:

‍In the respective year, business trips totaling 19,500 km were made. In the canton of St. Gallen, a mileage allowance of CHF 0.50 / km applies up to 22,500 km. Accordingly, CHF 9,750 (19,500 km x CHF 0.50 / km) can be declared as business travel costs.

b) Declaration as a business vehicle

If the car is mainly used for business activities, it can be declared as a business vehicle. In this case, all costs can be paid through the business and thus be considered as expenses in the determination of profit. However, since the vehicle continues to be used for private purposes as well, a so-called private share must be taken into account. This amounts to 0.8% of the purchase price of the vehicle without VAT per month or 9.6% for a whole year and is shown as a reduction in expenses.

‍Calculation example:

‍Total expenses for gasoline, insurance, etc. CHF 10,000Private share CHF - 3,840 (40,000 x 9.6%)*Total vehicle costs CHF 6,160 allowed as deduction*Assumption: The purchase price of the vehicle is CHF 43,200 incl. VAT i.e. CHF 40,000 excl. VAT

Unequal treatment of self-employed individuals

Since the implementation of the FABI proposal on January 1, 2016, the tax authorities have encountered a problem: While the deduction for travel expenses for employed individuals is now limited to CHF 3000, self-employed individuals remain unaffected by the limitation of the travel expense deduction. This leads to an unjustified unequal treatment. If the travel costs of self-employed individuals exceed the allowance of CHF 3000, some tax authorities therefore intend to add the difference to the taxable income.