Before covering registered offices relocation in Morocco, we should define the term “registered office” (also “headquarters”) under the provisions of the Moroccan Law. In Morocco, the registered office (headquarters) is the fiscal and administrative address of the company. This address is recorded in the trade register. Headquarters must be indicated in the following documents: The […]
First, note that tax residence (fiscal address) is a very important notion. Indeed, it allows to determine where and what income is taxable. Indeed, a person pays taxes on their income in their place of residence. Obviously, some exceptions may be provided for in tax treaties (e.g. real estate income). It is a common belief […]
What are the CIT territoriality guidelines ? The territoriality of CIT refers to the rules that apply to determine whether a company is subject to Corporate Income Tax based on its geographical location. In a previous article, we explained the inner workings of VAT territoriality in Morocco. In a similar manner, we will clarify in […]
This article provides a general overview of the withholding tax on foreign services in Morocco. Upsilon Consulting offers tax & legal counselling for your specific case. Request a quotation online. Withholding tax on foreign services in Morocco The issue of withholding tax on foreign services in Morocco is more and more raised. The 2019 amendments […]
The turnover, as defined in article 9 of the General Tax Code, corresponds to the revenues and receivables that the company has definitively obtained as a result of: Firstly, delivery of goods Secondly, provision of services Finally, the execution of real estate works. This amount is a taxable income subject to Corporate Income Tax. […]
What are the VAT territoriality guidelines? The territoriality of VAT refers to the rules that apply to determine whether a transaction is taxable for VAT within the jurisdiction or country where the transaction is performed. In Morocco, VAT territoriality rules are explained in the Article 88 of the General Tax Code. As such, the value […]
Did you know? It is possible to obtain a VAT credit refund in Morocco. It is necessary, however, to apply for it and to respect certain rules of substance and form. Upsilon Consulting gives the key elements of the process. Read our guide on investing in Morocco. VAT credit refund – Basis As a general […]
Corporate Income Tax : This article provides a brief summary of the provisions of the General Tax Code (C.G.I.) concerning Corporate Income Tax. This summary is not a substitute for a tax consultation or a detailed reading of the provisions of the C.G.I. and the circulars in effect. Corporate Income Tax – What it is […]
The understanding of deductible expenses is crucial in the determination of the taxable income, subject to Corporate Income Tax (C.I.T.). Indeed, as we explained in our article Corporate Income Tax (C.I.T), the tax base of the C.I.T. is determined by the difference between:
- Taxable revenues
- Deductible expenses
As a reminder, according to the provisions of the Article 10 of the General Tax Code (C.G.I, Code Général des Impôts), a deductible expense implies:
- Firstly, operating expenses : these expenses consist in current expenses, necessary for the activity. For example, costs of purchasing materials, personnel costs…
- Secondly, financial expenses : which include, amongst others, loan interests, exchange losses…
- Finally, non-current expenses : which are exceptional expenses incurred, such as losses on receivables, various penalties…
In practice, the Moroccan General Tax Code limits the deductibility of some specific expenses (penalties, gifts, etc.). In this case, although the company has the right to deduct these expenses, they must be added back. This tax adjustment is performed in the transition table from the accounting income to the taxable income.
This article outlines general principles. Do you have a specific question ? Contact us..
It is very important to distinguish between deductible and non-deductible expenses when submitting a return. If they are uncovered during a tax audit, penalties and surcharges may apply.
Before diving into a detailed analyze of deductible expenses, it is necessary to explain the conditions of deductibility of an expense.
Deductible expenses – What are the conditions of deductibility
In order for an expense to be tax deductible, a set of conditions must be met. These conditions concern both its nature and the reason for which it was incurred. In fact, these legal conditions are clearly explained in the circular (Note circulaire CGI 717 Tome 1). These conditions are as follows:
Firstly, the expense must be linked to the business management
The company must incur an expense for the benefit of the taxable activity and for its own needs. Therefore, any expense that the company incurs for the benefit of a partner is not a deductible expense.
Example : A partner’s personal trip with his children will not be deductible. However, a business trip to attend a trade show would be.
Secondly, the company must record the expense in its accounts
An expense, even if it is real and related to the business, loses its character as a deductible expense if the company fails to record it as an expense in the concerned year .
Thirdly, expenses must be effective as well as supported by a regular accounting document
It is important to understand that two sub-conditions emerge from this condition:
- Effectiveness of the expense: This means that even in the presence of an accounting document (invoice), the tax authorities have the right to question the effectiveness of the expense (case of false invoices, case of expenses not directly related to the activity,…)
- Justification of the expense: Even in the presence of a real and effective expense, the absence of an invoice or other probative evidence can be a reason for rejection
N.B : The particular case of expense claims is discussed in a separate article.
Finally, an expense must result in a decrease of the company’s net asset.
An expense that results in the entry of a new asset does not qualify for deduction.
Thus, expenses that increase the value of an asset are not deductible (e.g., improvements to an existing asset). In addition, expenses that extend the life of an asset are not deductible.
However, allowances for depreciation and amortization of fixed assets may be deducted under the common law conditions as explained later on in this article.
Particular Case : prior years’ expenses
The deduction of an expense must comply with the principle of the specialization of fiscal years.
Thus, expenses from prior years are not deductible. According to this principle, deductible expenses must affect the results of the year in which they are incurred. Thus, it is compulsory to assign to each fiscal year, the expenses arising from operations or events that took place during the said fiscal year, regardless of the date of payment.
Obtaining the taxable income
By virtue of the provisions of the article 8-I of C.G.I., each accounting period’s taxable income corresponds to the excess of revenues over expenses. The taxable income is obtained by applying the following adjustments to the accounting income:
- The company must add back non-deductible expenses (e.g. non-operating expenses);
- It has the right to deduct, extra-accounting, non-taxable revenue. (example: dividends benefiting from a 100% allowance)
The company proceeds with deductions and reintegrations in the following cases:
- First, when the income is totally or partially exempt, or subject to a tax allowance ;
- Secondly, when the expenses are totally or partially non-deductible, or their deduction is capped ;
- Or, because they have been previously taxed (or deducted) or their taxation (deduction) is deferred.
Example : The reversal of a previously added back provision is deducted in the transition table (although recorded as a revenue).
The adjusted taxable income serves as the new taxable base. All adjustments are recorded in a table attached to the tax return, known as the “table of transition from accounting income to taxable income”.
Deductible expenses are composed of the total of operating, financial and non-current expenses that have not been specifically identified as non-deductible.
Deductible expenses – Operating expenses
Operating expenses are deductible when they do not require an adjustment (or result from the adjustment). By virtue of the provisions of Article 10 of the General Tax Code:
“Operating expenses consist of:
A- purchases of goods re-sold and purchases of consumed materials and supplies;
B- other external expenses incurred or supported for operating purposes, including :
C- taxes and duties payable by the company, including additional contributions issued during the financial year, with the exception of the Corporate Income Tax;
D- personnel and labor costs as well as their related social charges, including housing assistance, representation allowances and other benefits in cash or kind granted to the company’s employees;
E- other operating expenses;
F- operating allowances.”
The General Tax Code defines operating expenses as expenses part of the class 61 in the Moroccan chart of accounts. Therefore, expenses are non-deductible:
- If they do not meet one of the conditions of deductibility mentioned above;
- Or, by virtue of an express provision of the law.
Let us now analyze each component provided for by the general tax code in the light of the Circular 717.
A – Purchases of goods re-sold and purchases of consumed materials and supplies
In general, every company subject to Corporate Income Tax can deduct all purchases made in the scope of its activity. These purchase are namely:
- Goods, when performing a trading activity;
- Raw materials, in the case of a manufacturing activity ;
- Other Supplies (water, electricity, office supplies…) ;
- Services, studies, outsourcing ..
The amount deductible for tax purposes is the purchase price, which is the invoiced price, including all taxes except deductible VAT.
However, companies not entitled to recover VAT, may record it as a deductible expense. Thus, for example, a company subject to a deductible proportion of VAT can benefit from the deduction of non-deductible VAT for Corporate Income Tax purposes.
In case when the company imports commodities, the Circular 717 states that the deductible expense is composed of :
- Purchase price
- Customs duties, related to the acquired goods
- Accessory costs such as freight, transit, insurance …
Note that, according to the same circular, the real cost is calculated by converting the value in foreign currency at the rate of the day of the subscription of the DUM (single declaration of goods – Déclaration Unitaire de Marchandise). Then, at the time of payment, the company may record a foreign exchange gain or loss based on the exchange rate on the day of payment. The realized exchange loss (or gain) is deductible (or taxable).
The circular provides further details on the deduction in the specific cases of outsourcing, real estate work… See Note circulaire CGI 717 Volume 1 for further details.
Particular Case : inventory change
As indicated before, the company must respect the principle of fiscal years’ specialization.
Thus, when a company purchases goods or materials and they remain in inventory at the end of the fiscal year, their value is not deductible. In fact, only purchases corresponding to actual consumption (or resale) during the fiscal year are deductible.
From an accounting point of view, this objective is achieved through the inventory change approach.
The inventory change is the difference between the inventory at the beginning and at the end of the year. The annual deductible amount is the difference between the annual volume of purchases and the said inventory change.
Thus, previously purchased goods and materials that entered the operating cycle during the year are part of the deductible expenses (debit inventory change). However, goods purchased during the year but forming part of the final inventory will only be deductible in the year of their consumption and/or sale (credit inventory change).
Note that this train of thought is valid for all other inventory items (supplies, parts, packaging,…). The company must calculate the inventory change at cost price, which also includes the approach costs. Obviously, the principle of ” the accessory following the principal” applies here.
B- Other external expenses
The company has the right to deduct all external expenses from its taxable income. These are expenses recorded in 613/614 accounts of its income statement.
Thus, the law considers as deductible the following expenses:
Rents and rental charges :
The company can deduct from its taxable income the rent of business premises, land and equipment. The same applies to premises used for staff accommodation (note that sometimes these correspond to benefits in kind that are subject to corporate income tax). Nevertheless, it should be noted that only the annual charge can be deducted.
Note that rents paid in advance and holdbacks are not deductible and must be accounted for as assets on the balance sheet. Sometimes they become deductible again when they result in a decrease in net assets (loss of guarantee, consumption of advance payments, etc.).
Special case of passenger vehicles: The rental of passenger vehicles for a period longer than 3 months is subject to a deduction limit (MAD 60,000 per vehicle per year). Obviously, their deduction is subject to the rules of substance and form that we have outlined above (especially, the connection with the activity).
Leasing is defined as a rental agreement with a promise (or commitment) to sell at the end of the rental period. The lessee pays annual royalties under this contract. At the end of the contract, the lessee may become the owner of the property in return for the payment of a residual value.
In the Moroccan chart of accounts, the annual contractual royalty is recorded as an expense (unlike in international accounting).
Leasing royalties are deductible without limitation from the taxable income and without conditions. The duration of the contract, even if it is shorter than the life-span of the asset, is not a limit to the deduction.
Once the acquisition is completed, the residual value is deducted as an allowance for depreciation over the remaining life of the asset.
Maintenance and repairs
The company can deduct from its taxable income any expense aimed at maintaining or restoring an asset to its normal state.
However, repair expenses ARE excluded from the right to deduct when they aim to :
- extend the life of an asset
- increase its value
In both cases, these expenses must be recorded as assets and be subject to depreciation.
When a company subscribes to an insurance policy for the needs of its operations, the premiums paid are deductible.
The right to deduct concerns all types of insurance (Property & Casualty, civil liability, fire, transport equipment, occupational accidents…).
Nevertheless, some particular insurance contracts require tax adjustments, namely:
- Firstly, premiums paid as part of insurance contracts, for the benefit of the company, on the lives of its management or key personnel are excluded from deductible expenses. In case of death, the capital received by the company is taxable up to the difference between the amount received and the premiums previously paid;
- Secondly, insurance premiums paid under a life insurance contract for the benefit of an employee are deductible. However, it should not be booked as insurance premiums but as a salary supplement subject to income tax and contributions (if applicable).
- Finally, premiums / provisions for own insurer. In this case, the company constitutes a provision (assigned or not to an asset) instead of subscribing to an insurance with an insurance company. These provisions are not tax deductible.
Remuneration of non-company personnel
Invoices paid by the company to temporary employment agencies (or other companies) for the use of casual, temporary or seconded personnel are considered as deductible expenses.
However, it is customary, when these employees are part of the same group, for the administration to request proof of the actual work of these employees.
Remuneration of intermediaries and fees
The remunerations that the company pays to external brokers are deductible (e.g.: commission for bringing in markets, commission to export agents, …).
The same applies to all fees paid to consulting firms such as:
- Fees for lawyers, accountants and other liberal professions ;
- Deeds and litigation costs ;
- Audit, management consulting and other fees ;
- Any remuneration paid to similar external firms ;
Note that: when these payments concern firms in Morocco, they must be reported in a separate tax return. (Return of remunerations allocated to third parties).
Patent and other royalties
Costs incurred to acquire a right to use an intangible property necessary for the activity are deductible. These include:
- Patent and license royalties
- Technical assistance fees (know-how transfer, manufacturing methods, technical advice,…) ;
- Purchase of studies, research and documentation
Please note that when these costs cover several years, they must be recorded as intangible assets and then amortized.
Expenses incurred for the transport of goods and personnel as well as the travel expenses of the company’s directors are deductible.
Travel, Missions and Events.
Unlike the common belief, the law and the circular consider that travel and mission expenses are deductible.
These expenses include travel, transportation, relocation and other expenses.
Like other expenses, the deductibility must respect the rules of form and substance, namely:
- Justify said expenses by the nature or importance of the operation
- Incur these expenses in the company’s interest
All costs incurred by the company to promote its products or brand are deductible expenses. This deduction applies to all media forms: flyers, television spots, radio, online advertising…
These costs include legal publicity expenses required by law (ordinary meetings, capital transactions, etc.).
They also include participation in national and international trade fairs and all exhibition costs.
Of course, if these expenses cover more than one fiscal year, they must be prorated and cannot be deducted in a single year.
Special case of promotional gifts:
Under the current provisions of the Article 10 (I-B-1°) of the General Tax Code, are deductible, promotional gifts whose value does not exceed one hundred (100) dirhams per unit and who are bearing either the company name or acronym, or the commercial name, or the brand of the products it manufactures or trades in.
This restriction does not apply to medical samples delivered free of charge by pharmaceutical companies to their customers during the year.
Postal and telecommunication expenses
The cost of purchasing postage stamps, telecommunication and internet costs as well as other similar costs are deductible expenses. This deduction is automatically acquired when these expenses are incurred in the interest of the taxable activity.
Contributions and donations
Contributions and donations made to some specific institutions are deductible expenses.
These donations are deductible without limitation when granted to the institutions listed in the Article 10 (I-B-2°). These institutions are for example: the public habous, “l’entraide national”, association recognized of public utility…
In addition, companies can also deduct donations to social charities from their taxable income. In this case, the deductions are capped at two thousandths of the donor’s turnover (VAT excluded).
Commissions and fees paid to banking institutions are deductible expenses.
Discounts, rebates obtained (R.R.R.O.)
When a company obtains off-invoice discounts or rebates from its suppliers, they must be booked and deducted from deductible expenses.
C- Deductible expenses – Taxes
Taxes paid by the company for its own account are tax deductible. These taxes include:
- Local and communal taxes ;
- Customs duties ;
- Registration fees ;
- Business tax ;
- Yearly special tax on vehicles (T.S.A.V.; Taxe Spéciale Annuelle sur les Véhicules)
- Stamp duties
- And, in general, all fiscal duties charged to the company (unless otherwise specified)
However, the following are not tax-deductible:
- Corporate Income Tax (C.I.T.)
- C.I.T. contributions
- Withholding taxes on fixed-income investment earnings
- Social Solidarity Contribution (C.S.S.; Constribution Sociale de Solidarité)
Penalties and surcharges paid by the company as a result of tax offences are not deductible from its taxable income.
D- Deductible expenses – Personnel expenses
Personnel and labor costs are deductible expenses. This deduction covers also the social expenses related to personnel costs.
This deduction applies to:
- Gross salaries
- Social and employer’s contributions
- Allowances, regardless of their nature, paid by the company to its employees
- Rewards of any kind paid to employees (13th month, bonuses, housing assistance…)
- Benefits in kind that the company pays instead of its employees
- Several additional costs related to personnel (occupational health, staff travel expenses, trips gifted to personnel…)
Moreover, remuneration paid to employees during vacation periods is also deductible.
Special case 1 : Provisions for paid leave
The company may establish a provision for paid leave. This provision is a deductible expense when the following conditions are met:
- The provision must be accurately determined
- Its amount must be individualized
Since this provision is not a component of the salary and wages declaration, the company must join a statement explaining the difference with its tax declaration.
Special case 2 – Severance pay
The company can deduct the compensation it pays to terminated employees. Said compensation is deductible up to the limit provided for by the legislation. The deduction is also valid for court-ordered indemnities. These expenses are deductible whether they are:
- Compensation for damages awarded by court
- Severance pay (termination indemnity)
- Voluntary severance pay
Special case 3 – Remuneration of company directors
Remuneration paid by the company to its directors is deductible as long as it does not exceed standard remuneration for the functions performed by the persons concerned.
However, a distinction must be made between remuneration for actual work performed and profit-sharing disguised as remuneration .
Thus, normal remunerations for actual work or a special function (special directors’ fees) are deductible from the Corporate Income Tax base. However, amounts corresponding to a share in the company’s profits are not deductible in principle. Exceptionally, if the company grants a profit-sharing to an employee, it can be deducted if it has already been subject to the Income Tax.
E- Oher operation expenses
The various other operating expenses are deductible, namely:
- Ordinary directors’ fees ;
- Losses on irrecoverable receivables, that have a usual aspect related to the regular activity of the company ;
- Losses on joint operations ;
- Transfer of profits on joint operations ;
Note that losses on receivables are only deductible to the extent that the company proves that it has taken the necessary steps to recover them. Thus, voluntary waivers of receivables are not deductible. On the other hand, losses due to the bankruptcy of a counterparty remain deductible.
F- Operating allowances
Operating allowances include depreciation, amortization and provisions.
Allowances for depreciation/amortization
Depreciation/Amortization is the accounting method of recording the loss in value of fixed assets. This loss is mainly due to
- Firstly, decline of value over time
- Secondly, technical obsolescence
Depreciation/Amortization aims to show the net value of fixed assets on the balance sheet (the net value is, by definition, lower than the historical value)
Assets that may be subject to amortization are:
- Capitalized Expenses : Preliminary expenses, Deferred expenses on several years… The amortization period of capitalized expenses is 5 years starting from the first fiscal year of their accounting entry
- Intangible Fixed Assets provided that they are subject to a loss of value over time. These include mainly R&D costs, patent and license costs… When an asset’s value does not decline over time, it can not be subject to amortization. This is particularly true in case of ‘goodwill’ when its use has no time limit.
Assets that may be subject to depreciation are:
- Tangible Fixed Assets of any kind (except land in general)
Depreciation and amortization allowances are calculated on the original value, excluding recoverable value added tax. The value to be depreciated or amortized corresponds to the amount that the company has recorded in the fixed assets. This original value is composed of:
- Acquisition cost, which includes the purchase price plus other transportation costs, insurance, customs duties and installation fees;
- Cost price for self-constructed capital asset
- Contribution value stipulated in the contribution deed for the contributed assets
- Contract value for assets acquired by way of exchange
Noted that registration and stamp duties, fees, commissions and legal costs are not included in the original value defined above. They are expenses to be spread over several years (Capitalized expenses).
Depreciation rates in Morocco
Generally, the deductible depreciation is the straight-line spreading of the historical value of the asset over its useful life.
From an accounting point of view, depreciation is the recording of the loss in value of fixed assets. Indeed, it is deemed that these assets deteriorate with time and use. As a result, depreciation and amortization expenses are intended to :
- To capitalize fixed assets at a value net of depreciation and amortization ;
- To charge each accounting period for the corresponding portion of the depreciation ;
The accounting law allows many types of depreciation :
- Straight-line depreciation
- Increasing depreciation rate
- Units of production method
Circular 717 gives the accepted depreciation period, for information purposes, for each category of depreciable asset.
As an illustration, here are some examples of the depreciation rates proposed in the circular:
- Building for residential or commercial use: 4%
- Permanent industrial buildings: 5%
- Small-scale constructions: 10%
- Fixtures and equipment: from 10%, up to 15%
- Important hardware: from 10% to 20%
- Computer hardware, peripheral equipment and programs: from 20% to 25%
- Furniture and software: 20%
- Rolling Stock: from 20% to 25%
- Low-value tooling: 30%
Special case : Passenger vehicles
The depreciation rate for the acquisition cost of passenger vehicles may not exceed MAD 300.000 per vehicle (VAT included), and should be evenly spread over a five year period.
If a vehicle exceeds this value, the portion exceeding this limit must be added-back.
Allowances for provisions
Provisions, similar to depreciation, can be used to cover losses on assets. The company can set up provisions even if there are no profits. However, provisions, unlike depreciation and amortization, aim to cover probable future losses or expenses.
The conditions for a provision to be deductible are the following:
- Allow to cope with a deductible depreciation, a loss or an expense
- The provision must cover losses and expenses which nature are clearly defined
- The losses and expenses must originate in the current fiscal year
- In order to be deductible, the provisions must be effectively booked in the current fiscal year’s account
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Deductible expenses – Financial expenses
According to the provisions of Article 10-II of the General Tax Code, financial expenses are deductible.
The term “financial charges” refers to all charges recorded in the accounts under accounting item 63 of the chart of accounts, namely:
- Interests expenses ;
- Exchange losses ;
- Other financial expenses ;
- Financial allowances.
Note that bank services and fees are not considered, within the meaning of the CGNC (Code Général de la Normalisation Comptable – General Accounting Standards Code), as financial expenses but as operating.
Conditions for the deductibility of interest on loans
Interest on loans is a deductible expense regardless of how it is calculated, as long as:
- The company can prove that the debt is real and that the interest is due
- The use of loans for the company’s operating purposes (any misuse can lead to the loss of the deduction right)
- Interest is attached to the relevant financial year, regardless of the payment period.
Special case: Interest on shareholders current accounts
Where interest is charged by a shareholder (or a parent company) in remuneration of Shareholders Current accounts, the following additional conditions should be met:
- The loan should not exceed the amount of the released capital ;
- Interest rate should not exceed the prescribed rate set yearly by the Ministry of Finance. This rate is set according to the average interest rate of the previous year’s 6-month Treasury bills.
If any of the above conditions are not met, the interest may be partially deductible.
Conditions for the deductibility of realized exchange losses
According to legal provisions, receivables and payables are booked during the year, at the rate of the transaction date. Exchange losses may be incurred if the settlement rate increases the transaction cost.
In such a case, we speak of realized exchange losses. These are deductible expenses.
However, at the closing date, foreign currency receivables and payables must be valued at the year-end rate. When a closing rate results in the company having a:
- Increase in payables
- Decrease in receivables
the company must record provisions for exchange losses. In general, these provisions are also considered deductible.
Other deductible financial expenses
The following expenses are also regarded as deductible :
- Losses on receivables from equity investments ;
- Net expenses on disposal of marketable securities ;
- Granted discounts.
Deductible expenses – Non-current expenses
In order to be deductible, non-current expenses (also called exceptional expenses) must, like other operating expenses and costs , satisfy the general conditions for deductibility of expenses.
Exceptional expenses are defined according to their nature.
They are conditioned by the occurrence of exceptional circumstances, mainly:
Net value of sold assets
They are deductible when the relevant revenue from assets disposal is taxable. Were they recorded without disposal revenue, they would be deductible if linked to fixed assets related to the company’s activity.
Others extraordinary expenses
The company may deduct the following expenses from its taxable income:
- Penalties and offences
- Additional tax assessments when they are not penalties (principal amount). Note that C.I.T. additional assessments are not deductible since C.I.T. itself is not ;
- Penalties and fines. A distinction should be made between:
- Penalties and tax fines for any legal or regulatory violations. These are not deductible.
- Court ordered damages payable are deductible from the fiscal income of the year when the final judgement has been issued.
Losses resulting from irrecoverable debts’ write-off are deductible. They are no longer deductible in the case of donations.
They consist mainly of degressive depreciation allowances and extraordinary allowances to regulated provisions.
Degressive depreciation allowances
Under common law, depreciation allowances must be calculated on a straight-line basis. The law allows companies, in specific cases, to proceed with a degressive depreciation. In such a case, the excess to the straight-line depreciation allowance is recorded as a degressive depreciation allowance. The latter is tax-deductible.
Allowances for regulated provisions
Depreciation allowances resulting from a preferential legal or tax regime, follow the general rules of said regime.
Partially non-deductible expenses
Expenses referred to in Article 10 (I-A, B and E) of the C.G.I. and which are paid in cash, are only deductible up to 50% of their amount.
Expenses recorded in the accounts are automatically deductible when the conditions for deductibility are met. Certain expenses are not deductible, in particular:
- Fines, penalties and tax surcharges (or other legal offences);
- Charges not supported by a proper document;
- Donations and non-operating expenses
In addition, the deductibility of some expenses is limited:
- Expenses paid in cash ;
- Certain donations
- Promotional gifts
- Allowances for depreciation of passenger vehicles
- Interest on Shareholders Current accounts
It is very important to identify these expenses when submitting a return. If they are uncovered during a tax audit, penalties and surcharges may apply.
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