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France Issues Guidance on the Tax Treatment of Professional Expenses Related to Teleworking — Orbitax Tax News & Alerts

The French Ministry of Economy and Finance has issued guidance on the tax treatment of professional expenses incurred in 2020 in relation to teleworking. This includes that allowances paid by employers to cover the costs of teleworking at home are generally exempt from income tax, including lump-sum reimbursements and reimbursement of actual costs. Employers are responsible for identifying such allowances in information sent to the tax authorities. The amount of taxable income pre-filled on the tax return should not, in principle, include such allowances. Employees can make sure of this when declaring their 2020 income, by checking the pre-filled amounts against their payslips and the annual tax certificate issued by their employer.

The guidance also provides specific limits for lump-sum allowances, including an exemption up to a limit of EUR 2.5 per day of teleworking from home, or EUR 50 per month assuming 20 days of teleworking. A special flat-rate allowance is presumed exempt up to an annual limit of EUR 550. However, for employees that have opted for the deduction of professional expenses for their real and justified amount, the actual costs for teleworking may be deducted if more favorable than the aforementioned limits.