TLDR: Yes, you can deduct actual professional expenses instead of the 10% flat-rate allowance, but you must permanently waive the latter for the entire tax year. The choice is global and irreversible, and requires supporting documentation for each expense.
Option for actual expenses
In France, employees can choose to deduct actual, justified professional expenses instead of applying the 10% flat-rate allowance on gross income. This choice is governed by Article 83 of the Code général des impôts (CGI) and requires permanently waiving the flat-rate allowance for the entire tax year. The option is global and applies to all earned income.
Who can opt for actual expenses
Deducting actual professional expenses is open to all employees, but there are specific situations with additional rules:
- Apprentices: Can deduct actual expenses only on the portion of salary not exempt from tax.
- Intermittent entertainment workers: Can choose between specific flat-rate deductions (14% or 5%) or actual expenses.
- Executives: The option is valid only if their remuneration is taxable under the rules for wages and salaries.
- Workers with dual residences: Can deduct additional expenses if the situation is required for professional reasons.
- Teachers and researchers: Can deduct a portion of household expenses if part of the home is used as a study.
- Employees with transport, meal, or accommodation expenses: Expenses are deductible if strictly work-related and supported by receipts or contracts.
How to exercise the option
The choice for actual expenses must be indicated in the tax return or through a formal claim submitted to the tax office within the established deadlines. The option is irreversible for the tax year and applies to all earned income.
Deductible expenses and required documentation
To deduct actual expenses, each item must be justified by documents. Eligible expenses include:
- Transport and meals for professional reasons.
- Professional membership fees.
- Interest on loans for purchasing shares in the employing company.
- Home office expenses.
- Dual residence for work requirements.
- Annual depreciation of multi-year assets.
Mandatory social contributions paid by the employee and expenses related to already tax-exempt income are not deductible.
Limits and incompatibilities
The option for actual expenses has some restrictions:
- The deduction is limited to the portion of remuneration that does not exceed the 10% flat-rate allowance ceiling.
- It is not possible to combine the 10% flat-rate allowance with the deduction of actual expenses for the same year.
- Expenses related to tax-exempt income are not allowed.