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Deduct unreasonable expenses

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Deductibility
Not deductible

Fiscal risk

When does an expense become unreasonable?

A self-employed person organises his professional activity as he sees fit: the administration does not supposedly have to question the economic choices of a self-employed person. If he chooses luxury coffee or rare plants for his office, good (or bad) for him!

However, the Income Tax Code states that expenses that unreasonably exceed professional needs are not deductible (art 53, 10o). The definition of 'unreasonableness' is therefore a case-by-case question, with no black or white answer.

Some guidelines:

- The proportion of costs in relation to your revenue

If half of your turnover goes to restaurants or luxury cars, any controller will ask himself, and to you, questions. For your information, 5% of your turnover in restaurant is the usual accepted limit....

- The professional connection

Prestige cars are obviously a classic target of the administration: it is difficult, in the vast majority of cases, to prove any professional link.

However, the case law has already proved the taxpayer right, in particular in a judgment of 12 March 1999: he had been able to credibly demonstrate that the nature of his business and the quality of his clientele required the acquisition of a luxury vehicle, a prestigious English brand...




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