Expenditure allocated to improving the safety of equipment - conditions relating to deductions for tax purposes - classification as a fixed asset - depreciation method

Many companies incur expenditure in order to improve the safety of their facilities and to comply with the provisions of the decree dated January 11, 1993, which transposes into French law an EU directive dated November 30, 1989.

1. The tax authorities have adopted a very strict position in this respect and recommend that such expenditures be systematically treated as fixed assets to be depreciated, as opposed to operating expenses which can immediately be deducted from the taxpayer's taxable income (Rep. Roques, A.N. December 30, 1996, p. 6874, no. 43987).

2. However, a distinction should be made according to the category of fixed assets to which such expenses are allocated.

If the equipment has been fully depreciated, the capitalized expenses should be depreciated over a period not exceeding the useful life of the equipment concerned.

If the equipment is still subject to depreciation, the expenses should be depreciated over a period equal to the remaining useful life of the equipment.

The content of this article is intended to provide a French guide to the subject matter. Specialist advice should be sought for your specific circumstances.

For additional information contact Claire Acard on +33 (1) or enter text search: "ARCHIBALD ANDERSEN Profile". The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.