Business Expense Deductions
Contractors can deduct legitimate business expenses from taxable income in their annual skattframtal. Proper documentation is essential — Skatturinn rejects estimated or undocumented deductions. Fustle helps track expenses throughout the year.
What expenses are deductible?
Deductible expenses must be wholly and exclusively for business purposes:
- Office supplies, stationery, and postage
- Software subscriptions and cloud services
- Professional development, courses, and books
- Business insurance premiums
- Phone and internet (business use share)
- Travel and accommodation for business
- Accounting and legal fees
Personal expenses are never deductible.
Documentation requirements
Keep receipts (kvittanir) for every expense you claim. Skatturinn may request proof during audits — undocumented deductions are rejected and can trigger penalties.
Fustle lets you upload receipts and tag expenses by category, building your deduction record automatically for skattframtal.
Home office deductions
If you work from home you can deduct a proportional share of rent, utilities, and internet based on the area used for business.
Skatturinn expects a reasonable percentage — typically the ratio of your dedicated workspace to total home area. Keep records of your calculation method.
What NOT to deduct
Skatturinn rejects these common mistakes:
- Estimated car expenses without mileage logs
- Personal meals and clothing
- Fines and penalties
- Personal insurance (life, health)
- Expenses already reimbursed by clients
Some online guides suggest "monthly car estimates" — these are not accepted by Skatturinn and can result in back taxes.
Claiming deductions in skattframtal
Enter all business expenses in your annual skattframtal, filed by end of March. Deductions reduce your taxable income and final tax bill.
Fustle pre-fills your skattframtal with tracked expenses and monthly filing data, so you claim every deduction you are entitled to.
Related guides
Official resources
Frequently asked questions
Can I deduct my laptop?
Yes, if used for business. For items over a certain value you may need to depreciate over several years rather than deduct fully in one year.
How does Fustle track my expenses?
Upload receipts in the Fustle dashboard, tag by category, and export a summary for your skattframtal at year end.
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