Professional Expenses in Umbrella Employment in France
If you’re an independent consultant considering working in France, it’s essential to understand how professional expenses are handled, especially in the context of ‘umbrella employment’.
In most cases, the activity of an independent consultant incurs costs inherent to the activity. These costs can vary and require a detailed explanation. Unlike the status of a sole trader (or micro-business), umbrella employment provides the benefit of professional expense reimbursement.
At Régie Portage, for example, the VAT deductible from professional expenses is directly credited to the activity account of the umbrella employee.
Different types of expenses exist, and the reimbursement of these professional expenses is not subject to social contributions. This presents an advantage, allowing you to optimize your net salary!
Are you interested in umbrella employment and want to learn more about the reimbursement of professional expenses? Discover the professional expenses reimbursement policy of Régie Portage and the different types of professional expenses eligible in umbrella employment.
Understanding Professional Expenses in Umbrella Employment
The costs incurred by an independent consultant can be varied, and it’s important to understand the different types of professional expenses you might encounter when operating under umbrella employment in France.
Professional expenses can be complex, with many different types of costs that could qualify. These can range from travel expenses to the costs of equipment and materials required for your work.
To better manage these costs and understand how they can affect your overall earnings, we’ll delve into the specifics of professional expenses in the context of umbrella employment. We’ll discuss different types of expenses and explain how you can get these expenses reimbursed, providing valuable insights that could help optimize your net income.
Mission Expenses
Mission expenses refer to the costs directly incurred by the mission itself. These expenses are not included in the total remuneration for the service. For the client to cover these costs, it’s necessary to include this point in your negotiation. The reimbursement of these costs must be agreed upon before the mission starts.
In order for these expenses not to be subject to social contributions and taxation, they should be clearly stated on your invoice to the client. This way, they won’t impact your net income, and you can effectively manage your earnings throughout the mission.
Operating Expenses
Operating expenses are what can be considered as true professional expenses. They are inherent to your activity itself and allow your operation to function. These expenses are not directly related to your mission and are usually not covered by your client.
However, you can include these fixed expenses in the calculation of your Daily Rate (TJM). This allows you to account for these costs in your overall pricing strategy, ensuring that your business remains profitable even when considering these necessary expenses.
Refundable Expenses
In umbrella employment, you might find yourself needing to bill a client for an expense that’s refundable. Indeed, to successfully carry out your mission, you may sometimes need to incur professional expenses on a personal level: purchasing supplies, traveling, or hiring a service provider. However, these expenses cannot be directly reimbursed to you because a company cannot make transfers to personal accounts that are not their employees.
Before incurring such expenses, we recommend obtaining a prior written agreement from your client company. In case of advance expenses, don’t hesitate to contact us. Once the expenses have been incurred, you submit your expense receipts to us and we proceed with the following actions:
- Invoice your client company for the expenses
- Recover the deductible VAT
- Reimburse the expenses
This process ensures you’re fairly compensated for any expenses incurred during the course of your work, while also making sure you comply with the rules and regulations surrounding expense reimbursement in umbrella employment.
Invoicing in Excluding VAT or Including VAT?
In accounting, it is customary that refundable expenses be invoiced based on the excluding VAT value of the including VAT amount that is reimbursed to you. In other words, you could gain the recoverable VAT that is reimbursed and have it credited to your activity account. This slight gain is tolerated for several reasons, including the administrative management of expenses.
However, to avoid any potential impact on your client, feel free to request not to invoice the VAT deductible part of professional expenses. It’s important to note that VAT may not always be deductible, for example, in cases such as accommodation expenses or expenses related to a company vehicle.