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Déductibilité des dépenses d’exploitation

BUSINESS TAXATION

Deductibility of operating expenses

According to tax law, businesses have the option to deduct operating expenses, ie expenses incurred for business purposes. It is important to note that only expenses directly linked to the professional activity of the company can be deducted. Therefore, any expenses incurred by the company for the manager’s personal or private purposes will not be deductible.

To illustrate this concept, let’s take the example of a manager of a company (SA, SARL) who invites a customer to a restaurant with the aim of concluding a professional contract. In this case, the expense incurred is clearly linked to the commercial activity of the company and can therefore be considered deductible. On the other hand, if this same manager invites a personal friend, the expense will be considered private and cannot be deducted.

It is also important to note that in some situations the line between business and private expenses can be blurred. For example, if the client invited by the manager is also a close friend, it will be necessary to determine whether the invitation is a professional or private relationship.

GENERAL RULE ON THE DEDUCTIBILITY OF EXPENSES

The amended law of December 4, 1967 concerning income tax (LIR) makes a distinction between deductible expenses, also called operating expenses, and non-deductible expenses.

  • Deductible expenses (operating expenses):

Operating expenses are those which are inherent to the activity of the company. They include all costs necessary for the proper functioning of the company, its activity and the achievement of its turnover. [1]

This includes expenses such as rent, staff costs, electricity, as well as some restaurant and travel costs.

  • Non-deductible expenses [2] :

Non-deductible expenses include those made in the personal interest of the taxpayer and for the maintenance of his family, as well as expenses linked to his lifestyle, even if they may have an impact on his profession or activity.

THE TWO MOST FREQUENTLY CONTESTED TYPES OF FEES

  1. Car and travel costs

Car and travel expenses incurred exclusively in the interest of professional activity constitute operating expenses. However, the taxpayer must prove that each trip was indeed made for professional reasons.

If a company car is provided, it is useful to keep a logbook to distinguish business trips from private trips.

Car and travel expenses incurred exclusively in the interest of professional activity constitute operating expenses. However, the taxpayer must prove that each trip was indeed made for professional reasons. For this, it is useful to keep a logbook.

Logbook template: 

 Each trip must be entered by mentioning the date, the direction of the trip, the reasons for this trip as well as the number of kilometers linked in the corresponding box (“Private” or “Professionals”).

The logbook allows you to establish the share of non-deductible expenses according to the ratio:
(Number of private kilometers / Number of total kilometers) * 100

This ratio is to be applied to the total vehicle expenses.

  • Amortization
  • Insurance
  • Fuel
  • Interview

Example:

Total vehicle-related expenses: €12,000

Private travel ratio: 30%

(12,000 * 0.3) = €3,600

The beneficiary of the vehicle will remain responsible for €3,600 to pay.

2.Restaurant fees

restaurant expenses can be deductible if the taxpayer can demonstrate that they were incurred in the exclusive interest of his professional activity.

Case law in this area is based on a set of criteria to determine the deductibility of these costs. Among these criteria, we find in particular:

  • The nature of the discussions or meetings held during the meal
  • The frequency and regularity of business meals
  • The context and location of the meal
  • The presence of third parties

* * *

  1. Article 45 paragraph 1 of the LIR
  2. Article 12 paragraph 1 of the LIR

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