What Expenses Are Generally Deductible?

All expenses that are justified by your professional or commercial activity are deductible and can be accounted for. These charges can be divided into five categories: fixed, variable, direct, indirect, and mixed.
Here's a table with some examples:

Fixed charges are recurring and must be paid regardless of your level of activity. Variable charges, on the other hand, fluctuate based on your business activity.

Direct charges directly impact your production costs, while indirect charges affect your production costs indirectly. This is why you need to prove the necessity of indirect expenses, such as travel, as purchasing a plane ticket isn't strictly tied to your activity.

Mixed charges have both a fixed and a variable component. For example, if an accountant has a contract with a hotel to provide 8 hours of services per month (fixed fee), but the hotel has high activity one month and requires 12 contracts, the additional 4 contracts are variable charges as they fall outside the contract terms.

What Distinguishes a Business Trip from a Personal Trip?

Prospecting a client, giving training, or visiting a fabric manufacturer for your clothing brand abroad is clearly different from spending a relaxing week at a beach hotel. However, how do you justify your trip if you don't land a contract with a client and, consequently, don't invoice for any services during the year?

As explained in this article, Guide: How to Keep Accounting Records for Self-Employed in Switzerland, you must be able to justify your income and expenses. In accounting, we call this a supporting document, which can be an invoice issued by your company, a bank statement, an electricity bill for your office, or a restaurant receipt following a business trip.

Let's consider a simple scenario

You're an artisan optician. A major eyewear brand is interested in your work and would like to partner with you. These exchanges take place via email and video conference. The client invites you to their offices in Paris to lay the groundwork for your collaboration.
You spend 4 days in Paris, from Tuesday to Friday, with the following schedule:

Tuesday

• Arrive in Paris at 8 pm
• 1 night at the hotel

Wednesday

• Meet with the client at 10 am
• Lunch offered by the client
• Afternoon in the client's offices
• Dinner with the client's employees
• 1 night at the hotel

Thursday

• Finalize the partnership
• Lunch with the client, paid by you
• Free afternoon (during which you decide to buy some discounted clothes and shoes)
• Dinner
• 1 night at the hotel

In this scenario, you can deduct:

Transportation costs to Paris, to the hotel, and to the client's offices
Meal expenses (lunches, dinners) and those offered to seal your partnership
Hotel expenses
Fuel costs for the distance traveled and parking fees for your car

You cannot deduct:

The clothes and shoes purchased on sale during your free time.

This example illustrates the line between your professional and personal activities, which we'll clarify further below.

What Proof Should You Keep for a Business Trip?

Transportation:

Invoices for plane tickets, train tickets, taxi receipts, car or bicycle rental invoices, receipts for public transport tickets, parking tickets, etc.

Accommodation:

Invoices for renting an Airbnb apartment, a hotel room, etc.

Meals:

Detailed restaurant receipts, grocery store receipts, proof of payment for meal deliveries

Note:

If you pay in cash, request itemized receipts.
During your travels, it's crucial to keep each ticket, proof of payment, or invoice bearing your company's details. It's recommended to take credit card receipts if the invoice doesn't include your payment method.
Consider dedicating a wallet, folder, or other item for storing these documents. The originals are important.

Gray Area:

Partially Business, Partially Personal Trips – What Are the Limits?
Let's consider a specific case to illustrate this explanation:
Once upon a time, there was a professional and passionate equestrian who participated in numerous equestrian competitions, which were part of his private life. His activity wasn't directly related to participating in competitions, but they allowed him to prospect clients in the equestrian field.
He attributed all the expenses to his professional activity, including hotel and restaurant bills, as well as the purchase of equestrian and luxury items for his clientele.

There are several problems here: Justifying the link between all expenses and the commercial activity or impact on turnover. Justifying such gifts to customers and identifying customers on invoices

Do you see the gray area again?

The key is to be proportionate and act in your company's best interest. The tax authorities base their assessment on the expenses of companies similar to yours to define the norm.
Keep in mind that the tax authority's primary role is to control and assist taxpayers in resolving these situations. Our friend above had several opportunities to properly justify his expenses.

Thus, the limits are defined first by your declared commercial activity in the commercial register. Secondly, your limits are set by your actual travel and work period. Within this framework, you can define a budget and what you wish to spend.
This is why buying cases of wine at your company's expense for your personal consumption is not allowed if you're a web designer. Similarly, if you stay a weekend between two weeks of work in a client's country and pay for tourist activities, these expenses cannot be deducted.
If you wish to give a gift to your client, there are also limits for this. The goal is to avoid abuse.

What Are the Risks of Abusing the System and Deducting a Personal Trip?

Depending on the abuse, you risk having your previous years' financial statements corrected with tax reminders. However, there are no fines or other risks.
If the tax authorities request supporting documents to complete your file and you fail to provide them within a certain timeframe, you risk being fined. The amounts vary depending on the situation.
Declaring a private expense as a business expense can be considered "use of a false document." In other words, if the expense is inaccurate or unjustified, you risk paying a fine as well.
You have the option to "raise your hand" and report the fact before any decision is made, in which case you will be forgiven. Understand that if you work in good faith with the tax authorities to prove your sincerity, you will gain leniency. After all, you're entitled to make mistakes when starting out.
Of course, the indirect consequences also include your reputation with the tax authorities and the stress generated by these situations.

Conclusion

Expenses during your business trips are, let's say, subject to common sense. The essential expenses are transportation, accommodation, and meals. Beyond that, you need to ask yourself about the actual impact of the expense on your turnover.

Furthermore, expenses must be fair, proportionate, and related to your company's financial level. You must keep original documents and be able to explain your stay.

Dear self-employed professionals, it's time for you to travel!