Business or private assets? How labelling your property works
Written by Ilias Aarrass6 min read · Last reviewed on 
Written by Ilias Aarrass6 min read · Last reviewed on Nearly everything you buy as an entrepreneur gets a tax label: business assets or private assets. That label decides whether costs and depreciation are deductible, but also whether a later sale profit is taxed. For purely business items the choice is quick. It gets interesting for anything used both ways: the car, the laptop that streams in the evening, the van that joins the summer holiday. The asset labelling rules govern those, and knowing them means choosing deliberately instead of by accident.
The 90% rules: when there is no choice
The main rule is simple. Use something 90% or more for business and it is mandatory business property. Use it 90% or more privately and it is mandatory private property; it does not belong on the business even if paid from the business account. Everything in between, business use from 10% to 90%, is optional property: you set the label. You make that choice per asset at purchase and process it in your next return.
What the label changes
The consequences run through the asset's whole life:
| Business asset | Private asset | |
|---|---|---|
| Costs and depreciation | Deductible from profit | Not deductible; sometimes a fixed allowance |
| Investment deductions such as the KIA | Possible | Not applicable |
| Value gain or book profit on sale | Taxed as profit | Untaxed |
| Private use | Correction or addition | Free |
The car: the best-known optional asset
Nearly every freelancer's car sees mixed use and is thus optional property. On the business: all car costs deductible, but an addition for private use. Kept private: no cost deduction, but € 0.23 per business kilometre claimed. Which side wins depends on the car and your mileage; the full framework is in buying, leasing or driving privately and the addition article. Important: VAT has its own separate labelling. You can keep a car private for income tax and still deduct VAT on maintenance in proportion to business use.
Choosing wisely with optional property
A few rules of thumb for the trade-off:
- High costs and rapid depreciation favour the business: deducting costs, depreciation and possibly the KIA weighs heavily.
- Expected value gains favour private: the sale profit stays untaxed. Think of a classic vehicle or equipment that holds value.
- Record actual use in the purchase year, for instance a rough hours or kilometre split. If questioned, you must substantiate the percentage.
- A workspace in your owned home has its own, different rules; see home workspace.
Frequently asked questions
I paid for my laptop from the business. Does that make it a business asset?
No, the paying account does not set the label; use and your choice do. A mainly business laptop will usually be a business asset, but paying for something purely private from the business is simply a private withdrawal.
Can I label part of something business and the rest private?
For one indivisible asset, like a car, you pick one label for the whole. For divisible property, like a building with separate workshop and home, each part can carry its own label.
What happens to the label when my use changes?
Small swings change nothing. If use changes permanently and fundamentally, say a private car deployed almost fully for business, that can be a special circumstance justifying relabelling. Coordinate such a switch with your bookkeeper, as tax is then settled on the difference.
Does this also apply to money in my business savings?
Liquid funds your business reasonably needs belong to business assets. Structurally surplus money you will never use for business belongs privately and then counts in box 3.
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.
Need more help with this?
Become a client from just €66 per month. Schedule a no-obligation call and find out what Fiscly can do for you.
Ilias
