Module 223 min2123 wordsFree — no account
Costs with their own limit: entertainment, meals and hotels, phones, maintenance and interest expense
The module’s worked examples, then cases to attempt before revealing their solution · 9 sections · 648 words · 8 min
Worked example
The allowance of a 12 million euro business
A company reports 12 million euros of core-business revenue. On the first 10 million, 1.5% gives 150,000 euros; on the next 2 million, 0.6% gives 12,000 euros. The total allowance is 162,000 euros, and entertainment spending above that figure goes back into taxable income.
Worked example
A large company across all three bands
With 60 million euros of core-business revenue, the allowance has three parts: 10 million × 1.5% = 150,000 euros, 40 million × 0.6% = 240,000 euros, 10 million × 0.4% = 40,000 euros. The total deductible is 430,000 euros, roughly 0.72% of revenue.
Worked example
The owner's business trip
A business owner spends 300 euros on a hotel and 100 euros on dinner in Milan, paid by card, plus 60 euros on a taxi paid in cash. Hotel and dinner: 400 × 75% = 300 euros deductible. The taxi, paid in cash in Italy, is not deductible. In total, 300 euros out of 460 spent can be deducted.
Worked example
A consultant's meal ceiling
A consultant with 60,000 euros of fees spends 2,000 euros on restaurants and hotels for work, paid by card. The 75% share gives 1,500 euros, but the ceiling of 2% of fees is 1,200 euros. She therefore deducts 1,200 euros: the fee-based limit prevails over the percentage.
Worked example
A business phone plan
A 40 euro monthly plan costs 480 euros a year. The deductible share is 480 × 80% = 384 euros, while 96 euros go back into taxable income. The cut applies even if the phone is used only for work: the rule does not ask anyone to measure private calls.
Worked example
Repairs above the limit
At the start of 2026 a business's fixed-asset register shows 200,000 euros of total cost. The limit is 200,000 × 5% = 10,000 euros. Repairs for the year come to 16,000 euros: 10,000 are deducted in 2026, and the 6,000 excess is deducted in instalments of 1,200 euros from 2027 to 2031.
Worked example
A maintenance contract with a regular fee
A business pays an outside technician 3,600 euros a year under a periodic maintenance contract for its machinery, plus 2,000 euros of one-off repairs. The fee is deducted in full in the year it relates to and stays outside the 5 percent limit; only the repairs are measured against the limit.
Worked example
A loan that weighs on the accounts
A company has 50,000 euros of interest expense, 5,000 euros of interest income and ROL of 100,000 euros, with nothing carried forward. Thirty percent of ROL is 30,000 euros. It deducts 5,000 + 30,000 = 35,000 euros; the remaining 15,000 euros move to later years.
Practical case
Paolo's company tax return
In 2026 Paolo's SRL has core-business revenue of 1,500,000 euros. It books 30,000 euros of entertainment paid by bank transfer, 8,000 euros of hotels and restaurants for the shareholders' business trips paid by card, 5,000 euros of phone costs, 14,000 euros of repairs with depreciable assets of 200,000 euros at the start of the year, 40,000 euros of interest expense, 2,000 euros of interest income and ROL of 90,000 euros, with nothing carried forward. By how much does 2026 taxable income rise, and how much of that rise can be recovered in later years?
Hint: Work out the non-deductible share of each cost family, then separate the excesses the law pushes into later years from those lost for good.
Show the solution
Entertainment: allowance 1,500,000 × 1.5% = 22,500 euros; excess 7,500 euros. Meals and hotels: 8,000 × 25% = 2,000 euros non-deductible. Phones: 5,000 × 20% = 1,000 euros. Repairs: limit 200,000 × 5% = 10,000 euros; excess 4,000 euros, recoverable in five instalments of 800 euros. Interest: deductible 2,000 + 30% of 90,000 = 29,000 euros; excess 11,000 euros, carried forward. Total added back: 7,500 + 2,000 + 1,000 + 4,000 + 11,000 = 25,500 euros. Recoverable later: 4,000 + 11,000 = 15,000 euros.
Answer: 25,500 euros, of which 15,000 recoverable
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