Payroll costs
Transport and travel expenses
1. Definition
Transport and travel expenses are the costs incurred on the occasion of a business trip decided by the employer, and borne by him.
They are not limited to the journey. They cover the trip and everything that trip makes necessary: accommodation, food, subsistence away from one's usual place of work.
Three elements characterise them, and must all be present:
| The element | What it means | |
|---|---|---|
| 1 | An actual expense | A sum has genuinely been spent, and can be established |
| 2 | A professional origin | The trip stems from a decision of the employer, not from a personal initiative |
| 3 | Coverage by the employer | The company bears the cost, either in kind or by reimbursement |
What the definition rules out from the start. A sum paid without any trip having taken place, or without any expense having been incurred, does not fall into this category, whatever name it bears on the payslip.
2. The principle
Transport and travel expenses paid by the employer to workers do not constitute components of pay, on one condition: that they correspond to expenses actually incurred.
The whole subject rests on that condition. It is what separates a reimbursement from a disguised salary supplement.
| An expense reimbursement | A salary supplement | |
|---|---|---|
| What it does | Reimburses an expense the employee has advanced | Pays for the work performed |
| What it produces for the employee | It restores him to balance | It enriches him |
| Is it income? | No | Yes |
3. What these expenses cover
| Expense | What it covers |
|---|---|
| Subsistence expenses or per diem | Day-to-day expenses incurred while travelling |
| Accommodation expenses | Lodging during the trip |
| Transport expenses | The travel itself |
| Meal expenses | Meals taken while travelling |
What these four items have in common. None would exist without the trip requested by the employer. The employee would have borne none of these costs had he stayed at his usual post.
It is this causal link that grounds the reimbursement: the company covers a cost that its own need created.
4. How to verify that it really is a reimbursement
A payment presented as an expense reimbursement may in reality have the character of pay. Three criteria make it possible to determine this.
Criterion 1: fixity or constancy
The amount must not depend on the employer's discretion.
If the employer can arbitrarily vary the amount from one moment to another, or from one employee to another, it is no longer a salary supplement but a gratuity.
Otherwise, the item of remuneration will be subject to contributions.
An essential nuance: fixity is not to be understood rigidly. It accommodates a percentage or a rate whose actual amount varies — for example a balance-sheet or results bonus, which follows the takings.
What matters, then, is not that the sum be identical, but that the rule be.
Criterion 2: permanence, continuity or regularity
Items of remuneration must be paid regularly and at the same time to employees, or to a homogeneous category within the company.
Regularity removes any element of chance from the payment, to the point that the employee builds it into his spending habits.
That is the decisive test: a payment one can count on ceases to be a one-off compensation. It becomes part of income.
Criterion 3: generality or homogeneity
Base pay, bonuses, allowances and benefits must be paid to all workers, or to a homogeneous category of them: by function, by duties, by age, and so on.
In that case, the conditions of award are determined by:
- collective agreements;
- establishment-level agreements;
- specific staff regulations;
and not according to the expenses actually incurred by each employee.
This is where the sharpest dividing line can be read.
A payment calculated according to a collective rule falls within pay.
A payment calculated on each person's actual expenses falls within expense reimbursement.
The same heading may therefore cover either one, depending on how the amount is determined.
The two additional conditions
If the salary, bonus, allowance or benefit in kind does indeed meet these three conditions, it must further be the case:
| The condition | |
|---|---|
| 4 | That it excludes any intention of liberality on the employer's part |
| 5 | That it appears as a salary supplement in the eyes of the workers |
Application to common cases
| Item | Treatment |
|---|---|
| Base pay | Always subject to the payment of contributions |
| Allowances genuinely corresponding to expense reimbursements | Very often not subject |
The word "genuinely" carries the whole rule.
A sum labelled a reimbursement but paid in a fixed, regular and general manner, with no link to actual expenses, in fact meets the criteria of pay. It is the nature of the payment that governs, never its heading.
5. The applicable regime
Since transport and travel expenses do not constitute income for the employee, they are subject to no deductions:
| Deduction | Application |
|---|---|
| ITS: Tax on Wages and Salaries (Impôt sur les Traitements et Salaires) | Not subject |
| INPS: National Social Security Institute (Institut National de Prévoyance Sociale) | Not subject |
| CANAM: National Health Insurance Fund (Caisse Nationale d'Assurance Maladie) | Not subject |
The logic of this regime. Tax and contributions are levied on income. A reimbursement does not enrich the person receiving it: it returns to him a sum he had advanced. There is therefore no taxable base.
6. The two treatment rules
| The rule | Why | |
|---|---|---|
| 1 | They must not be recorded on the payslip | The payslip sets out remuneration. Entering a reimbursement there would present it as income, and would blur the very classification that everything above seeks to establish |
| 2 | They must constitute expenses for the employer | The cost was incurred in the company's interest: it is on that basis that it is booked |
The two rules answer each other.
The same CFA franc leaves the same account, but it does not tell the same story depending on where it is entered. On the payroll, it becomes a component of remuneration. Under expenses, it remains what it is: the cost of a trip requested by the company.
Booking is therefore not a matter of form: it is the accounting translation of the regime.
The essentials in 7 points
- Transport and travel expenses are the actual costs incurred on the occasion of a business trip decided by the employer, and borne by him.
- They are not components of pay, provided they correspond to expenses actually incurred.
- They cover subsistence expenses or per diem, accommodation, transport and meals.
- Three criteria, on the contrary, reveal the character of pay: fixity, regularity, generality — to which are added the absence of any intention of liberality and the perception of the payment as a salary supplement.
- The sharpest dividing line: an amount set by a collective rule falls within pay; an amount tracking expenses actually incurred falls within reimbursement.
- Not being income, these expenses are subject neither to the ITS, nor to the INPS, nor to CANAM.
- Two treatment rules: never on the payslip, always as expenses for the employer.