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France Makes Telework Allowances for Employees Tax Exempt

Posted on Mar. 3, 2021

Allowances paid by employers to cover telework expenses are exempt from individual income tax, according to guidance released by the French Ministry of Finance.

Because the COVID-19 crisis has forced many employees to telework and incur professional expenses at home, the French MOF published guidelines March 2 outlining the tax treatment of related allowances, lump sum reimbursements, or reimbursements of actual expenses.

According to the guidelines, lump sum allowances are tax exempt up to a limit of €2.5 per day of telework, or €50 for a month that includes 20 days of telework, not to exceed €550 annually. Employees who choose to deduct professional expenses in the real, justified amounts may deduct the actual amounts if this is more favorable, the guidance says.

A professional allowance should only cover expenses from teleworking at home and not those generally required for work, such as commuting costs and workplace and catering costs, according to the guidance.

The MOF said employers must identify the allowances exempt from income tax in the information they send to tax authorities. Therefore, professional allowances should not be included in the amount of taxable income pre-filled on income tax returns. Employees should check this amount against their pay slips, the MOF said.

More information on how to apply and determine the amount an employee may deduct for costs related to teleworking will be available soon at the official online services website of the General Directorate of Public Finances.

In December 2020 France extended to March 31 cross-border tax agreements with Belgium, Germany, and Switzerland regarding the tax status of cross-border workers during the coronavirus pandemic.

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