All you need to know about expense reports

What is an expense report?

Whether you’re an employee or an employer, here are the essentials you need to know about expense claims.

In the course of his or her duties, an employee may incur a number of business expenses out of his or her own funds:

– Transportation costs (train or plane tickets, etc.)

– Travel expenses (gas, tolls, when the employee uses his or her own car)

– Meal expenses (lunch with customers, for example)

– Lodging expenses (one night’s hotel accommodation for an assignment outside Paris)

– Cost of supplies or equipment

– Telecommuting costs since the Covid epidemic

The employee will then request reimbursement of these expenses from the company, by drawing up an expense claim.

How do I draw up an expense report?

All expenses subject to an expense claim must have been incurred in the company’s interest and to enable the employee to carry out his or her duties properly. It must also be reasonable in relation to the mission’s objectives. This expense must be supported by an invoice, including the date, nature and amount of the expense, in digital or paper format. The employer may request additional information if he deems it useful, for example the names of guests invited to the meal…

Each company determines the nature of the document to be completed for the reimbursement claim, but the information is essentially the same: name of employee, date and place of expenditure, nature of expenses incurred, means of payment used…

Is there a limit to expense reports?

Depending on the company’s choice, there are two reimbursement options. The flat-rate system sets a ceiling on expenses, determined by URSSAF, for each type of expense. The employee will not be reimbursed for any expenses incurred in excess of this ceiling. Flat-rate costs give companies a clear view of their expenses.

Under the actual expense system, the employee is reimbursed exactly for the costs incurred, up to a ceiling set by the employer.

For the employee, the amount reimbursed by expense reports is not taxable and cannot be deducted from his or her remuneration. For the company, a certain number of expenses incurred as business expenses are eligible for VAT reclaim, and may be exempt from social security contributions.

What are the most common disputes concerning expense claims?

An employer may consider that an expense claim is excessive or does not correspond to a real expense. If he considers this to be an attempt at fraud, he must refuse to reimburse the expenses.

Another recurring concern is the loss of proof of expenditure. The employee can then ask for a duplicate of this invoice, or justify the expense by producing a bank statement or a declaration on his or her honor for limited amounts.

The expense claim system is an integral part of corporate life. It makes them run more smoothly, but can be cumbersome and costly to manage. All the more reason to define a clear expense policy and rigorous management procedures.