The conditions for obtaining the flat-rate deduction for professional expenses are changing

From January 1, 2023, professionals who fail to comply with the conditions for obtaining the flat-rate deduction for professional expenses will be subject to an adjustment of social security contributions.

A benefit offered to certain categories of employees

For certain categories of employees, employers can apply a specific flat-rate deduction (DFS) for professional expenses to the basis for calculating Social Security contributions, unemployment insurance and AGS contributions.

The exhaustive list of professions concerned is set out inarticle 5 of appendix IV of the French General Tax Code. They include sales representatives, flight crews, journalists, dramatic artists and musicians.

New conditions for implementation

To implement this deduction, it is necessary to :

  • Respecting the scope of the professions concerned
  • Ensure that the amount does not exceed 7,600 euros per calendar year per employee
  • Justify the absence of an express refusal by the employee or his representatives
  • Do not combine the DFS with the exclusion from the contribution base of sums paid to reimburse business expenses.

Since April 1, 2021, Urssaf has required that the employee concerned incurs expenses in connection with his or her professional activity, and that these are fully covered or reimbursed by the employer. The rules for granting the DFS were further tightened in 2022. Each year, the employer must obtain the employee's agreement to apply the deduction and inform him of the impact on his pension insurance rights.

In the event of an Urssaf inspection, companies that fail to comply with the new conditions for implementing the DFS will be subject to a request for future compliance, which they must ensure they respect. However, as from January 1, 2023, this tolerance will come to an end, and companies will be liable to an adjustment of their social security contributions.

Adaptations planned for the construction sector

The conditions for granting the specific flat-rate deduction for professional expenses have been modified for building and civil engineering companies. In accordance with an agreement signed between the building and public works sector and the government, employees are not required to incur business expenses in order to claim this benefit. What's more, the deduction can be combined with the reimbursement of business expenses.

However, these measures do not come without a quid pro quo. The government has specified that the DFS rate will be maintained at 10% until December 31, 2023, before being gradually reduced over 8 years until it is no longer applicable on January 1, 2032. Specifically, the reduction will be 1% per year until 2030, then 1.5% over the last two years.