An insight into tax-free reimbursement of relocation expenses in France
Promotion, transfer or a job opportunity overseas… certain career changes can require geographic mobility.
Moving helpers, truck rental, finding accommodation, paying for two rents or for temporary accommodation… these are just some of the expenses incurred by relocation.
Often these expenses are covered by the employer, either based on a legal obligation or negotiation.
Even though that the Labor Code does not contain provisions regarding relocation expenses, the jurisprudence considers that expenses must be borne by the employer if caused by the professional activity and in the interest of the employer. This has to be assessed on a case-by-case basis. Certain collective bargaining agreements also contain provisions in relation to relocation, such as additional paid time off (e.g. the CBA Wholesale).
If conditions are met, the reimbursement of relocation expenses by the employer is exempt from social contributions and payroll taxes. Relocation expenses refunds to newly hired employee can also be exempt and tax-free, under the condition that the relocation is not for pure personal convenience.
Reimbursement of relocation expenses by the employer
In certain cases, such as international mobility, expense refunds must be based on actual expenses to be tax-free. In other cases, employers have the choice between a lump sum reimbursement and actual expenses reimbursement upon receipts.
Lump sum reimbursement
URSSAF fixes lump sum rates for different types of expenses. Temporary accommodation expenses as well as additional food expenses can be reimbursed with € 77.20 per day, for a period up to 9 months maximum. Expenses for settling in the new accommodation may be covered by a flat rate of €1,547.20 as of 1 January 2022. This amount is increased by € 129 per child, up to a maximum of 1 933,90 €.
The full conditions and the latest rates can be found on:
www.urssaf.fr
In addition, to the before mentioned flat sums, refunds of moving expenses are tax-free if proofed by receipts.
Reimbursement based on actual expenses
If the actual expenses exceed the flat rates, the employer can choose to reimburse on the basis of the actual expenses. The employer will have to keep proof of the actual expenses. This will be requested by French authorities in case of an audit.
State aid – Mobili-Pass
As a side note, employees can apply for a state aid. In certain cases a state subsidy of up to € 2200 can be granted. Conditions and the application process can be found on:
www.actionlogement.fr