Income tax · July 19, 2026 · 2 min read
Flat-rate expenses vs. actual expenses for sole traders
A sole trader can claim expenses in two ways: as a flat rate (a percentage of income) or as actual, verifiable expenses. The choice affects both your tax and the amount of paperwork.
How flat-rate expenses work
With the flat rate, you claim a set percentage of your income (up to the statutory cap) without having to document individual expenses. On top of that, you can add the social and health insurance contributions you have paid. The advantage is simplicity – you do not have to collect and keep track of receipts.
How actual expenses work
With actual expenses, you claim the real costs of your business (materials, goods, energy, equipment, services), which you must support with documents and keep records of. You keep single-entry bookkeeping or tax records.
When the flat rate pays off
The flat rate tends to be advantageous for sole traders with low actual costs – typically in services where the main “input” is your own work (IT, consulting, crafts that do not need much material).
When actual expenses pay off
If you have high actual costs (purchases of goods, expensive materials, large investments), actual expenses will reduce your tax base more than the flat rate. In that case the extra paperwork is worth it.
How to decide
Compare how much you would claim with the flat rate against the total of your actual expenses. If your actual expenses significantly exceed the flat rate, choose them. An accountant can quickly do the calculation for you.
Current figures (2026)
Flat-rate expenses
Percentage of income | 60% |
Maximum annual cap | €20,000 |
Figures valid for 2026; check the current wording.
Related articles: How to reduce your tax base legally and safely, Corporate income tax return step by step, Non-taxable portions of the tax base: overview and conditions.
Frequently asked questions
Can I change the way I claim expenses every year?
The method is chosen for each tax period. A change is possible, but it has knock-on effects (e.g. on your records), so discuss it with an expert.
Are social and health insurance contributions included in the flat rate?
As a rule, you claim the contributions you have paid in addition to the flat-rate expenses. Check the current conditions for the year concerned.
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