Expense reports: what are they?

Expense reports allow an employee to obtain reimbursement for his/her expenses (meals, travel, accommodation, etc.). However, these costs are incurred in the context of the employee’s business activity and not as personal expenses. Therefore, several conditions must be met for reimbursements to be paid by the company. Please note that the reimbursement of expenses cannot be deducted from the employee’s remuneration.

What are the different types of expense reports?

Mileage expense report

This type of expense report is for expenses related to business travel with a personal vehicle. The employee is reimbursed for his mileage expenses. Mileage allowances are then calculated by the employer through a tax scale.
The reimbursable amount for business expenses takes into account:

  • wear and tear and maintenance costs of the vehicle used
  • vehicle insurance costs
  • fuel costs

Please note that the journey from your home to your place of work cannot be included in the expense report and is therefore considered as a personal journey, this journey can only be included in business expenses with the agreement of the employer. It should be noted that in some countries a 10% deduction is allowed in a tax return for employees who own a vehicle used on journeys between home and work. It is also possible for the employee to waive this flat-rate deduction in order to benefit from a deduction of actual expenses under the current tax schedule.
It should be noted that the processing and management of expense reports can quickly turn into a nightmare. Find out about our expense management software to help you keep your accounts up to date and save time.

Standard expense report

In this case, the employee simply has to provide information on the amount and the name of the supplier. This type of expense report works in the same way as other expense reports.
When the administrator accepts the employee’s expense report, it is then recorded as business expenses.

How to complete an expense report

It is important, even necessary, for all employees to have the same expense report template to avoid reimbursement problems.
First of all, the employee must be aware of the company’s business expense and reimbursement policy. The employee must present all supporting documentation for the expenses he or she wishes to declare. It is important to have original or scanned documents without any changes to dates or inflation of the costs incurred by the employee.
To find out more about our expense management software:

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What are the rules applicable to expense reports?

Expense reports are subject to strict control. Both actual and secondary costs are generally exempt from social security contributions. This is why both the employee and the employer must ensure that the supporting documents and, of course, the business expenses allocated are accurate. Poor control can lead the company to an adjustment by the tax authority.
Find out more about conditions relating to business expenses:

Business restaurants expenses

For the reimbursement of meal expenses, the receipt must mention:

  • the names of the people in attendance at the meal
  • the reason
  • the name and address of the restaurant
  • the invoice must include the name of the company

It should be noted that despite its importance, this condition is only very rarely respected.

Accomodation costs

Hotel stays can only be claimed if they are at least 31 miles away from the employee’s home or the journey must be of at least 1.5 hours.

Mileage costs

Information needed for mileage reports:

  • the reason for the journey
  • the destination
  • the distance travelled by the vehicle
  • the type of vehicle
  • the vehicle’s tax band

For other types of travel (air, train, bus, underground, etc.), in order to be reimbursed, the employee must keep hold of his/her reservation or receipt with all related details.

The manager’s role will therefore be to ensure that the standards set by the tax authorities are respected by the company’s employees. This implies establishing a clear business expenses policy to allow the company to properly manage its employees’ business expenses. It is also the guarantor of the duties and rights of employees when travelling. Only then can a tax adjustment be avoided. A travel and expense management solution allows a company to control and monitor compliance with its business expense policy and thus optimise its costs.
Business expense management solutions will overcome the disadvantages of expense reports.

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