For an expense to be deductible from a company's taxable income, it must be incurred in the company's interest and be related to its activity. Personal expenses are, by definition, not deductible.
During a tax audit, the tax administration found that a company had deducted the long-term rental costs and fuel expenses for a high-end passenger vehicle made available to its director, considering these expenses to be for personal use.
The company contested this, arguing that the vehicle was used solely for professional purposes. It pointed out that the director lived in Paris, the vehicle had low mileage, and it was usually parked near the company premises.
However, these arguments did not convince the judges. They stated that the director's place of residence, the vehicle's low mileage, or its parking location alone were not sufficient to demonstrate professional use. Due to a lack of documentation establishing the reality of professional travel, the rental and fuel costs could therefore not be deducted from taxable income.
This ruling serves as a reminder that simply providing a vehicle to a director is not enough to justify deducting associated expenses. In the event of a tax audit, the company must be able to prove its use for professional purposes, for example, through a record of trips made or receipts for appointments and missions.
