As a self-employed professional, you automatically deal with bank fees. You receive payments from clients, pay suppliers, and see costs deducted from your bank account every month. It is only logical that you start wondering how deducting business bank account costs actually works. What is allowed, what is not, and how do you process this without making mistakes?

No complicated story, below I explain it calmly and clearly.

What are business bank account costs?
Business bank account costs are all the expenses you pay for using your business bank account. Think of monthly subscription fees, per-transaction costs, or service fees that are automatically deducted. Because you use this account for your business, these costs fall under self-employed bank fees.

As long as your account is used exclusively for business purposes, the tax authorities also consider these costs to be fully business-related. That makes the processing much simpler.

What about VAT on bank fees?
A frequently asked question is whether bank fees include VAT. In most cases, the answer is no. Banks provide financial services that are exempt from VAT. This means no VAT is charged on things like transfers, direct debits, or maintaining a payment account.

Because no VAT is charged, there is also nothing you can reclaim in your VAT return. That may sound disadvantageous, but it does keep your VAT administration straightforward. VAT on bank fees usually does not need to be included in your return.

There are exceptions, however. Some services, such as renting a card payment terminal, do not fall under this exemption. In that case, VAT is included on the invoice and you may deduct that VAT if you are VAT-registered. Always check carefully what is listed on your bank invoice.

Can you deduct bank fees as a self-employed professional?
Yes, self-employed bank fees are deductible as long as they are business-related. This means the costs are incurred for your business and not for private use. If you use a business account, these costs are fully deductible and reduce your profit. That ultimately leads to less income tax.

If you use a personal account for business payments, things become more complicated. You then need to be able to demonstrate which portion of the costs is business-related. That is exactly why many self-employed professionals choose a separate business account. It prevents discussions and saves a lot of effort.

How should you record bank fees?
When recording bank fees, it is important to process them without VAT. Because bank services are usually VAT-exempt, you select “no VAT” or “VAT-exempt” in your accounting software. This prevents VAT from being mistakenly included in your return.

You record the costs in the year in which they are paid. That sounds obvious, but bank fees are often automatically deducted and therefore easily overlooked. By checking your bank statements regularly, you ensure that recording bank fees is always done correctly.

Why correct processing is so important
If you do not process deductible business bank account costs correctly, it can result in an incorrect profit calculation or an incorrect VAT return. This can later lead to questions or corrections from the tax authorities.

By recording self-employed bank fees neatly and consistently, you keep control over your figures. You know where your money goes, avoid mistakes, and keep your administration clear. And that brings peace of mind.

In short
You may deduct business bank fees if they are genuinely business-related. Most bank fees do not include VAT, which means VAT on bank fees usually does not play a role in your return. You record bank fees without VAT and in the year of payment. A separate business account makes all of this much easier.

Need help?
Are you unsure whether everything has been recorded correctly? Or would you rather not think about this at all anymore? Then it is smart to leave this to an accountant. That way you can be sure that things like self-employed bank fees, VAT rules, and deductions are handled correctly automatically.