Writing off the cost of an investment that failed
Written by Ilias Aarrass6 min read · Published on · Last reviewed on 
In short
The costs of a failed project remain deductible because the test is whether you incurred them with your business in mind, and a capitalised investment is written down to the lower business value in the year it became clear the book value can no longer be realised.
- The write-off belongs in the year the decision was made; record that moment with a note or cancellation.
- The VAT deduction stands if at the time of purchase you intended to generate taxable turnover.
- If you get money back with a credit note, you correct the VAT on that amount.
- If within five years you sell assets on which you received investment relief, the disinvestment addition can apply above € 2,900.
Doing business means trying things, and sometimes an attempt yields nothing. You have an app built that you never launch, you buy equipment for a service that does not catch on, or you pay a deposit to a supplier that goes under. The question is whether you may deduct those costs, because there is no turnover to show against them. The answer is generally yes: what counts is that you made the expense with your business in mind, not whether it succeeded. This article explains how to write off those costs correctly and what evidence to have ready.
Failed does not mean non-deductible
Costs are deductible if they were incurred with the business interests of your company in mind. That is a test at the moment you make the expense, not a review of the result afterwards. Market research showing your plan does not work is therefore ordinarily deductible, as are the development costs of a product you ultimately do not launch. The tax authorities may not say afterwards that the expense was pointless, unless there was no business interest from the outset.
The line lies with expenses that were really private. A course you took out of personal interest, or equipment you use at home and never deployed for business, remains private, even if you attach a business plan to it. See which costs are deductible for the main rules and contributing private assets if it went the other way round.
| Situation | Entry |
|---|---|
| Loose costs for a project that falls through | straight to costs in the year you incurred them |
| Capitalised development costs that prove worthless | write down to nil in the year that becomes clear |
| An asset you do not use and sell at a loss | book loss in your profit, watch the disinvestment addition |
| A deposit lost through a bankruptcy | write off as a loss once it is clear you get nothing |
| A subscription you prepaid and do not use | ordinary costs, spread over the term |
Write off at once or revalue?
Small expenses are simple: they are already in your books as costs and need no further action. It gets more interesting if you capitalised something, for example a website, an app or equipment above € 450. That sits on your balance sheet as an asset and you depreciate it over years. If it turns out to be worthless, you may write it down to the lower business value, sometimes to nil. That loss goes into your profit in one go.
Timing matters. You write off in the year it became clear it yielded nothing, not a year later because that is more convenient for tax. So record when you decided to stop the project: an email, a note or a cancellation letter is enough. See capitalise or deduct at once for the threshold and depreciation for how the terms work.
An app built that never goes live
- Investment
- € 9,000 of development costs, capitalised and depreciated over three years
- Depreciated
- € 3,000 in the first year
- Decision
- in year two you stop the project, the app is unusable
- Write-down
- the remaining book value of € 6,000 charged to profit in one go
- Investment relief
- if you received relief and sell nothing, there is no disinvestment addition
Result: In year two € 6,000 reduces your profit. If that takes your profit below nil, you can offset that loss against other years; see [offsetting losses](kb:verlies-verrekenen-zzp).
VAT on an investment that failed
You do not have to repay the VAT you deducted on purchase simply because the project failed. The deduction depends on your intention at the time of purchase: if you intended to generate taxable turnover with it, the deduction was justified, even if that turnover never came. That is settled case law and it also applies to plans you abort before a single euro of turnover.
Two exceptions. If you get money back from your supplier, a credit note goes with it and you correct the VAT on that amount. And if it concerns an asset you move to private use or start using for exempt purposes within the adjustment period, a correction can still follow; see VAT adjustment on investments.
What you must be able to show
With a sizeable write-off the tax authorities want to be able to follow what happened. That is no problem if you keep three things: why you made the investment, what it cost and why you stopped. A plan or quotation at the start, the invoices in between and a short note with the decision at the end is enough. If your supplier goes bankrupt, add the administrator's letter or a printout from the insolvency register.
Also try to limit the amount before writing off. See whether you can sell something, recover part of the deposit, or use the software for something else. That is not only commercially sensible, it also makes your write-off more credible. If a legal dispute lies behind it, those costs are deductible too; see legal costs.
- Keep the plan or quotation with which the investment started.
- Note the date and the reason for the decision to stop.
- Write off in the year that decision was made, not later.
- Only correct VAT if you actually get money back with a credit note.
Frequently asked questions
Can I deduct costs from a project that failed?
Yes. The test is whether you incurred the costs with your business in mind, not whether the plan succeeded. Only expenses that were in reality private stay out of your profit.
Do I have to repay the VAT if the project falls through?
No, not if at the time of purchase you intended to generate taxable turnover with it. If you get part of your money back with a credit note, you correct the VAT on that amount.
When do I write off a capitalised investment?
In the year it became clear the book value can no longer be realised. Record that moment with a note, a cancellation or correspondence, so the choice of year can be substantiated.
What if the write-off makes my profit negative?
Then you have a loss you can offset against profits from earlier or later years. The rules and deadlines for that are in the article on offsetting losses.
Sources
- Business costsBelastingdienst · belastingdienst.nl
- Disinvestment additionBelastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
