On this page
Per item: capitalize or expense
What lasts years and keeps serving the business becomes an intangible fixed asset that you depreciate. What recurs or merely keeps the site up is an expense of the year itself. IFRS spells it out in interpretation SIC-32; local GAAP differs per country but follows the same logic:
| Item | Capitalize or expense | SIC-32 stage |
|---|---|---|
| Planning, research, choosing a supplier | expense | planning |
| Design and build of a new site | can capitalize | application and design development |
| Online store, portal, own platform | usually capitalize | application and infrastructure development |
| Content created to sell through the site | can capitalize, if it lasts | content development |
| Hosting, domain name, licences | expense | operating |
| Upkeep, updates, SEO, new copy | expense | operating |
| Ads | expense | not a site cost |
We write this page as builders, not accountants: the choice belongs in your accounting policy, decided with your accountant. What a site costs to build and run is in website cost and website cost per year; a client portal or own platform is nearly always capitalized, and what such a system costs is in custom software development cost. Not sure you need a site at all yet? Read do I need a website.
A 6,000 euro site in your result
A 6,000 euro site in your resultExpensed at once, or capitalized over five years
- Expensed, year 16,000 euro
- Capitalized, year 11,200 euro
- Capitalized, years 2 to 51,200 euro a year
What capitalizing does to your result
Over five years the total deduction is the same; what differs is when. Expensing at once lowers profit in the year of the build. Capitalizing spreads it and keeps equity higher, which a bank or investor likes to see. Buy halfway through the year and you depreciate only part of it in the first year, the rule in Belgium since 2020 for all companies: an online store of 18,000 euro finished in July gives 3,600 euro of depreciation a year over five years, but only 1,800 euro in the first year.
VAT on the site is recoverable if you are VAT-registered and the site serves your taxed business, whether you capitalize or expense. If you received a grant for the build, it affects the booking; for Belgium see website grants in Belgium and Flanders digitalisation grants.
What to agree before you sign
Ask your developer to invoice the build and recurring costs separately, so your accountant books each item correctly. Set the quote against the table above, mark each item as one-off or recurring, and send that list to your accountant before you sign, not after the first invoice. Ask which threshold your accounting policy uses for capitalizing. Comparing several quotes? Read compare website quotes, and plan the build to be ready when you need it with how long does it take to build a website.