Every small business owner has a mental list of what they think is deductible, and it is usually part right. The parts that are wrong tend to surface during an audit, which is the worst time to find out.
The governing principle in France is straightforward. An expense is deductible if it is incurred in the interest of the business, corresponds to an actual expenditure, is properly documented, and is recorded in the accounts for the year it relates to.
Everything else is detail. But the detail is where the money is.
Generally deductible
Premises. Rent, service charges, insurance, utilities, maintenance.
Equipment and supplies. Items below a threshold can be expensed immediately. Above it, they are capitalised and depreciated over their useful life. Getting this boundary right matters for the year's result.
Professional services. Accountant, lawyer, consultants, subcontractors.
Insurance. Professional liability, premises, equipment, and business vehicle cover.
Software and subscriptions. Tools used for the business, which for most companies is now a substantial line.
Training. Where it relates to the current activity.
Bank charges and loan interest on business borrowing.
Advertising and marketing.
Employee costs. Salaries, employer contributions, and mandatory benefits.
Deductible with conditions
Meals. Business meals with clients or partners are deductible where there is a genuine professional purpose. Record who was present and why. Meals taken alone while working away from base are treated differently and only the portion above what a meal at home would have cost is deductible, with a set reference figure applied.
Vehicles. This is the most error-prone area. A vehicle used for both business and private purposes is only deductible on the business proportion, which means keeping a log. Passenger cars carry a deduction ceiling on depreciation that varies with CO2 emissions, and VAT on the purchase of a passenger car is generally not recoverable at all, though it is on commercial vehicles. Fuel VAT recovery differs between diesel and petrol.
Home office. If you work from home, a proportion of rent, utilities and insurance can be deducted based on the share of the property used for the business. The proportion has to be defensible, meaning based on floor area actually used, not a round number chosen for convenience.
Client gifts. Deductible up to a per-recipient annual limit, and gifts above a total threshold must be declared on a specific form.
Travel and accommodation. Deductible for genuine business travel. Documentation matters, particularly the purpose.
Clothing. Only where it is genuinely specific to the work, such as protective equipment or a uniform. A suit is not deductible however necessary it feels.
Not deductible
Fines and penalties, including parking and speeding
Personal expenses, however routed through the business account
Expenses without supporting documentation
Excessive or unjustified expenditure disproportionate to the activity
Most passenger car VAT, as above
The VAT layer
Deductibility for income or corporation tax and VAT recoverability are two different questions, and an expense can be one without the other.
To recover VAT you need an invoice in the business's name showing the VAT separately. A till receipt without those details does not support recovery. Restaurant VAT is recoverable, most passenger car VAT is not, and there are specific rules on fuel that depend on the vehicle and the fuel type.
Businesses under the franchise en base do not charge VAT and cannot recover it, which is one of the trade-offs of that regime.
The record-keeping that makes this work
Every deduction needs a supporting document, retained for the statutory period. In practice the failures are almost never about the rules. They are about receipts that were never kept.
Three habits fix most of it:
Photograph receipts immediately. Thermal paper fades to blank within months. A receipt you cannot read is a deduction you cannot claim.
Note the purpose at the time. "Lunch, 62 euros" tells an inspector nothing. "Lunch with client name, discussing project" is a defensible entry. Written six months later from memory, it is neither accurate nor convincing.
Use the business account for business. Mixing personal and business spending on one card creates hours of reconstruction and invites questions about everything.
Connected tooling helps here more than in most areas of admin, because the problem is capture rather than calculation. Mirage Cloud connects to Qonto and Pennylane, which puts transactions and accounting in the same place, and its accounting agent handles French VAT and expense questions specifically.
Two caveats worth stating plainly. Rules change with each finance bill, and general AI assistants frequently answer French tax questions with rules from another country. And anything with a tax consequence should be confirmed by a qualified professional before it is filed. Use the tool to understand the position and prepare the question, not to make the decision.
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