All you need to know about keeping paper or electronic expense reports
Keeping expense reports and supporting documents entails a number of obligations that you should be aware of, to avoid any risk of sanctions.
Indeed, given that certain expenses are exempt from charges, the tax authorities may carry out checks to ensure that the company is in order and not, for example, disguising benefits in kind.
How long can I keep invoices and receipts for business expenses? In the age of dematerialization, are there different rules for scanned expense reports?
Expense claims and supporting documents: a quick reminder
The expense claim is a form filled out to declare expenses incurred by the employee in the interest of the company, to which the expense claim receipt proving the expense is attached.
This may be a paper document, but more and more administrative departments are opting for dematerialized expense reports. In this case, the form is scanned or edited within a dedicated application, and the supporting documents are photographed or scanned, then attached and stored on a server.
Expense claim retention period
Since January 1, 2019, the French Social Security Financing Act has included an obligation to retain documents and supporting evidence, necessary for the calculation of the base and the control of social security contributions by the Urssaf, for a minimum of 6 years.
☝️ However, Article L 123-22 of the French Commercial Code stipulates a 10-year retention period for accounting documents and vouchers, starting from the end of the financial year. As expense receipts are also used for bookkeeping purposes, a 10-year retention period is recommended for peace of mind.
✅ If you don't want to fill your cupboards or shelves with receipts for a decade, dematerialization is a good option.
They'll be all the easier to find in the event of an Urssaf inspection, thanks to a search by date or keyword.
What's more, no more problems with disappearing ink, dates or amounts!
But does it have the same value as the original expense claim and supporting documents?
Retention and dematerialization: the law adapts
Since the May 23, 2019 decree of the Social Security financing law discussed above (article L.243-16 of the Social Security Code), the digitization of expense claim receipts has probative, i.e. legal, value.
However, there are a number of conditions that must be met if it is to be on a par with keeping paper expense claims:
- the receipt must be reproduced identically , to guarantee that it is a true copy of the original;
- the chosen format must be unique, so that it can be read and processed by all systems over the long term (PDF format or PDF A/3 (ISO 19005-3) format);
- digitization must comply with the one-star general security reference system (RGS), including a time-stamping system capable of tracing the various operations carried out.
⚠️ All expense reports (and supporting documents) dating from before July 1, 2010, the date on which the decree came into force, must be kept in paper format to be legally valid.
Why keep your expense reports?
Keeping expense reports meets 2 obligations and objectives. It provides proof to the tax authorities:
- on the one hand, that the reimbursements relate to business expenses, and not personal ones;
- secondly, that they are eligible for VAT recovery, which is not the case for all expenses.
In the event of an Urssaf audit
We've already touched on this, but it's the Urssaf that sets the rules and carries out random checks, or checks where fraud is suspected (such as the disguised benefit in kind mentioned in the introduction).
Keep all supporting documents, such as :
- proof of meal expenses (receipt from restaurant, caterer or supermarket),
- cab bill,
- hotel bill,
- toll or parking ticket,
- mileage bill with departure and arrival addresses, vehicle registration document, etc.
To reclaim VAT
VAT can be reclaimed on certain business expenses.
In order to claim a refund when filing your VAT return, you may need to provide supporting documents showing the amount of VAT.
Possible penalties for failure to keep expense reports
Article 1734 of the French General Tax Code provides for a fine of €10,000 for failure to provide the documents requested by the tax authorities within the prescribed deadlines.
In the absence of supporting documents, Urssaf may also reclassify business expenses as benefits in kind:
- the company will then have to pay the social security contributions due;
- the employee must pay tax on the benefit in kind.
According to Mooncard, 36% of Urssaf reassessments are due to poor management of expense claims. A good reason to make sure you keep your expense reports.
How can you optimize the management of your expense reports?
A final tip: with digital archiving, not only are your documents safe and traceable, but you also save on storage space, and therefore money.
If you're interested in a professional solution for managing your expense reports, our directory is packed with tools incorporating :
- OCR technology for scanning and automatic character recognition, in particular of amounts, dates and types of expense on receipts,
- archiving of your receipts with probative value,
- automatic classification of expense types by category,
- detection of recoverable VAT,
- connection with your accounting and payroll software for reimbursements.
You'll save precious time and avoid oversights or data entry errors. Are you convinced?
Article translated from French