Deduction of French VAT on expense reports: rules, conditions and points of vigilance

1. Legal framework and general principle

In application of article 271 of the CGI, the VAT that has been charged to professional expenses is deductible if:

• They are necessary for the activity of the company;
• They are supported by a regular bill meeting the obligations of article 289 of the CGI and Annex II (mandatory information, identification of the parties, VAT correctly indicated).

Jurisprudence and doctrine recall that cash receipts, bank card receipts or summary statements drawn up by employees do not constitute invoices in the fiscal sense. Therefore, the VAT charged on these documents cannot be deducted.

Concrete examples

• A salesperson pays for a customer lunch and only gives the bank card ticket: no deductible VAT, for lack of an invoice.
• An employee presents a hotel bill showing VAT and the name of the company: VAT deductible, if the expense is incurred in the interest of the activity.
• A company reimburses mileage expenses based on an internal scale: no VAT is deductible because it is not a taxed expense.

To remember

• VAT is only deductible if expense reports are justified by compliant invoices.
• The supporting documents must be established In the name of the company and not in the name of the employee.
• Some expenses remain excluded by nature (housing, non-professional reception expenses).

2. Substantive and formal requirements

Background conditions

• The expense must be reported in thedirect and exclusive interest of the company.
• It must concern an activity eligible for deduction (deduction coefficient > 0).

Form requirements

• Detention of a Compliant invoice with mandatory information (name, address of the parties, VAT rate and amount).
• The invoice must be drawn up In the name of the company, even if the employee advances the expense.
• The supporting documents must be archived to respond to tax audits.

Electronic invoicing and VAT deduction on expense reports

With the reform of electronic invoicing, new rules apply to expense reports:

• Restaurant bills under €150 excluding VAT: they are in principle subject to electronic invoicing, but administrative tolerance allows them not to include the identification of the customer. In this case, the restaurateur declares the operation in B2C e-reporting. However, to be able to deduct VAT, the company must request an electronic invoice issued in its name.
• Notes greater than €150 excluding VAT or at the request of the customer subject to: an electronic invoice is mandatory, mentioning the SIREN number and the electronic billing address of the company.
• Expenses advanced by an employee: If the expense is paid by an employee but the invoice is issued in the name of the company, it falls within the scope of electronic invoicing and is eligible for deduction. The employee is then considered to be a third party payer and the company must provide a specific receiving address for these invoices.

In practice, companies must ensure that they correctly set up their addresses for receiving electronic invoices (via PA or public portal) in order to ensure the recovery of the supporting documents necessary to exercise the right to deduct.

3. Expenses eligible for deduction

• Transport costs (train tickets, flights, taxis, VTC) → VAT deductible if the invoice is correct.
• Accommodation costs → VAT deductible only for employees and managers on business trips; excluded for their personal expenses.
• Meal expenses → VAT deductible if the meal is linked to a professional activity (business meal, mission). Meals for personal convenience are not deductible.
• Ancillary costs (telephone, parking, tolls) → VAT deductible if compliant invoices.

4. Expenses excluded from the right to deduct

Some expenses are excluded by law (CGI, art. 206 ann. II):

• Housing expenses incurred for managers or employees (except in specific cases of missions).
• Sumptuary expenses (hunting, yachts, pleasure homes).
• Unprofessional reception fees.

5. Jurisprudence and doctrine

• CE, April 17, 2013, no. 334423: VAT on restaurant bills drawn up in the name of employees cannot be deducted by the company, even if they are professional.
• TA Nantes, May 28, 2009: summary statements of expenses or simple credit card receipts are not comparable to invoices.
• CJEU, 21 March 2018, C-533/16, Volkswagen AG: The right to deduct is a fundamental principle of VAT neutrality, but it is strictly conditional on the possession of an invoice that complies with the requirements of the VAT Directive.

Points of vigilance

• Invoices in the name of the company: essential condition to deduct VAT.
• Incomplete supporting documents: insufficient cash receipts or credit card receipts.
• Expenses excluded: accommodation, reception, sumptuary expenses.
• Archiving: keep invoices and expense reports in certified paper or electronic format.
• Controls: the administration verifies the reality of the fees and their link with the activity.
• Electronic invoicing: anticipate the impacts of the reform to set up reception addresses and avoid the loss of supporting documents.

Conclusion

The deduction of VAT on expense reports is a lever for tax optimization for businesses, but it complies with strict rules: regular invoices, business expenses, exclusions provided by law and now compliance with the electronic invoicing framework. Any documentary error may result in a rejection of the deduction and an adjustment.

Cyplom's support

Cyplom helps you secure the VAT deduction on your expense reports:

• Documentary audit to check the conformity of the supporting documents.
• Digital tools to automate the processing and archiving of expense reports.
• Formation of your accounting teams to VAT rules (meal expenses, transport, accommodation).
• Tax advice to anticipate the impacts of electronic invoicing and optimize your deduction rights.

Cyplom can transform your expense reports into a secure tax optimization tool.

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