Your guide to business expenses in France
Find out exactly what counts as a business expenses in France, as well as how to declare them and get reimbursed.
4 min read
Whether you’re an employee or run your own company, you’ve probably heard of business expenses. But understanding what actually counts as a business expense, who can claim them, and how reimbursements work may not be so simple. That’s why we’re bringing you a detailed guide to business expenses in France.
Business expenses, defined
Simply put, business expenses are the costs incurred by an employee as part of their work. In general, they’re paid by the employee, who is later reimbursed by the employer for either all—or a portion—of the total cost.
The different types of business expenses
There are several different kinds of business expenses in France. Here’s a breakdown:
- Food-related expenses. These include meals eaten during business trips or at the workplace, if there are organizational constraints.
- Commuting expenses. Employers are required to pay 50% of the cost of an employee’s public transit pass, provided it’s used to get to work. Under certain conditions, the company may also reimburse fuel costs for employees who use their own vehicles to get to work.
- Business use of a personal vehicle. This type of expense is incurred when an employee needs to use their own car for work purposes. In this case, reimbursements are issued according to a mileage scale.
- Travel expenses. These are additional expenses for food and lodging during a business trip more than 50 km away or 1.5 hours drive from the worker’s residence.
- Mobility expenses. These may include expenses incurred for a job transfer, including temporary accommodation and food expenses while waiting to move into a new home.
- Expenses incurred by working from home. Your employer may cover computer equipment and maintenance, internet connection, or even rental space for teleworking.
- Clothing expenses. These are expenses for the maintenance (“cleaning costs”) of employee uniforms or other required work clothing.
- Professional documentation fee. These are the costs of purchasing all the required documents which are needed for the employee and their job.
- Other expenses that could also be covered by the employer include fees related to dual residency, union dues, and educational or vocational training expenses.
Getting business expenses reimbursed
There are two ways to reimburse business expenses:
- Via a lump-sum allowance. In this case, the company pays a monthly bonus, defined in the employment contract as “compensation.” This type of reimbursement is generally used for recurring business expenses, and employees aren’t required to keep receipts for each expense. The lump-sum allowance applies to the costs of meals, use of a personal vehicle for business purposes, long distance travel, and expenses for lodging, food, and relocation to a new home for business purposes.
- By reimbursing actual expenses. In this case, the company reimburses the expenses incurred by the employee when the employee presents proof of their expenses, such as an invoice. The reimbursement of actual expenses applies to expenses related to telecommuting, relocation, temporary assignments in overseas territories, or for employees seconded abroad.
Professional expenses and social security contribution exemptions
Whether you’re reimbursed for actual expenses or with a lump-sum allowance, this money isn’t included in your salary, which means that the payments may not be subject to social security contributions (CRDS and CSG). Simply put—this means that for some business expenses, you’ll get the cash, but no social security taxes will be deducted. The reimbursement of actual expenses is fully exempt from social security contributions, while the social security contribution exemption is limited to a certain ceiling, defined by the tax authorities. If the lump sum allowance exceeds the set amount, the company must justify these amounts to obtain a social security contribution exemption. Otherwise, social security tax may be charged on any fees above the lump-sum ceiling.
Business expenses and taxes—declaring business expenses
Business expenses aren’t taxable. However, they can be tax-deductible! There are two options for claiming these deductions.
- Apply an automatic 10% deduction from your income. This deduction is capped at €12,652. Still, you’ll have to add the business expense allowances covered by the 10% deduction to the income you report on lines 1AJ through 1DJ of your tax return.
- Deduct the exact amount of your actual expenses. This is a great solution if your expenses are more than 10% of your taxable income. In this case, you’ll have to report your business expenses in boxes 1AK through 1DK of form 2042. You’ll also need to provide an explanatory note detailing these expenses, and keep all supporting documentation—such as your invoices—for at least three years.
These options can’t be combined—you must choose one or the other.
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