TLDR: In France, computers, phones, and internet subscriptions are deductible only if they meet specific accounting and tax criteria, which vary depending on the nature of the expense and the business or freelancer’s tax regime. Internally developed software and websites may qualify for immediate or deferred deductions, while physical equipment must be depreciated. Internet subscriptions and hosting services are deductible as expenses in the fiscal year they are incurred.
Deduction of Computers and Physical Equipment
Physical equipment such as computers and servers must be capitalized as assets and depreciated over their normal useful life. Immediate deduction is not allowed for these types of assets unless they fall under specific preferential regimes. This means you cannot deduct the full cost in a single year; instead, it must be spread over the asset’s useful life.
Software and Websites
Costs for creating software or websites can be deducted immediately only if the company has opted for the regime under Article 236 I of the CGI (Code Général des Impôts). Otherwise, they must be capitalized and depreciated over their useful life. Preliminary research costs before development cannot be capitalized and must be recorded as expenses in the year they are incurred.
Internet Subscriptions and Hosting Services
Internet access contracts and website hosting services are considered ongoing service provisions. Their costs are deductible on a pro rata basis during the fiscal year in which the service is used. If hosting occurs on servers owned by the company, these must be capitalized and depreciated over their useful life.
Deduction Criteria
To be deductible, expenses must be:
- Clearly identifiable,
- Offer serious prospects of technical success and commercial profitability,
- Intended for completion, use, or sale,
- Supported by adequate technical and financial capacity,
- Expected to generate future economic benefits. Additionally, expenses must be reliably measurable.
Exclusions
The option for immediate deduction of development expenses does not apply to software acquired after January 1, 2017. Furthermore, the choice between immediate or deferred deduction is global and cannot be applied on a project-by-project basis; it must be uniformly applied to all company projects.
Final Considerations
The deductibility of these expenses depends on their accounting and tax classification. It is essential to consult an accountant or tax expert to ensure compliance with current regulations and maximize tax benefits.