Pre-registration costs: what can the company deduct?
Rent, purchases, professional fees, formation costs incurred before registration: how the company takes them over and what it can actually deduct for accounting, tax and VAT purposes.
Expert note: This article was written by our chartered accountancy firm. Information is current as of 2026. For a personalised review of your situation, contact us.
Quick answer. Costs incurred before registration (rent, purchases, professional fees, formation costs) are only deductible by the company if it formally takes over the acts, through one of the three mechanisms set out in articles L210-6 and R210-6 of the French Commercial Code. Input VAT remains recoverable on the first VAT return, subject to invoice conditions.
Weeks often pass between the moment you decide to set up your company and the date it legally exists (registration). During that window, you already spend money: a rent deposit for premises, a first equipment purchase, lawyer or chartered accountant fees, the legal notice, the registry fees. The question that comes up again and again in formation files is simple: can these costs, paid before the company existed, be borne and deducted by it, or do they remain your personal expense?
The answer is neither automatic nor trivial. It determines your tax deduction, your VAT recovery and, sometimes, your personal liability. Here is how to secure that handover.
The company in formation: who pays, who is liable?#
Until the company is registered, it has no legal personality. It can therefore neither sign a contract, hold an account, nor bear an expense in its own name. It is the founders (or the appointed agent) who act, and who commit personally.
The point often overlooked: under article L210-6 of the Commercial Code, the persons who acted on behalf of a company in formation, before its registration, are bound by the resulting obligations on a personal and joint-and-several basis. In concrete terms, if the landlord claims unpaid rent or the supplier an invoice, it is you, personally, who answer for the debt until the company has taken over the act.
It is precisely this takeover that transfers the commitment (and therefore the deductible expense) from the founder to the company.
The three mechanisms for taking over the acts#
The Commercial Code (articles L210-6 and R210-6) provides three routes for the company to take over the acts entered into before its birth. Once taken over, the acts are deemed to have been concluded by the company from the outset: the effect is retroactive.
| Mechanism | How | When the takeover takes effect |
|---|---|---|
| Statement of acts annexed to the articles | You list the acts carried out on behalf of the company in formation in a document annexed to the articles. Signing the articles amounts to takeover. | Automatically, upon registration |
| Mandate (in the articles or by separate deed) | The partners mandate a person to carry out specified acts, the terms of which are set out. | Upon registration, if the acts are specified |
| Partners' decision after registration | For acts not covered by the first two mechanisms, the general meeting votes on their takeover. | On the date of the takeover decision |
Our chartered accountant's view: the first two mechanisms (annexed statement and mandate) are by far the safest, because the takeover is automatic and does not depend on a later vote. The third, takeover by partners' decision, is a useful safety net, but it requires a meeting and careful drafting. It is also the one that causes the most difficulty when a cost was forgotten at the start.
To structure your formation file and the statement of acts properly, see our practical guide on setting up your company without mistakes via the INPI single window.
The underestimated risk: the forgotten act#
The risk founders most underestimate: the act entered into but never listed nor taken over. In that case, the expense remains legally yours, the company cannot deduct it, and the related VAT is not recoverable by it. A January rent paid before a March registration, if it appears nowhere, becomes a personal expense lost for tax purposes. Hence the importance of keeping, from the very first euro spent, an exhaustive and dated list of the acts.
Formation costs: expenses or assets?#
Formation costs as such (registration duties, notary, lawyer or intermediary fees, the cost of legal formalities such as the legal notice and registry) constitute what the chart of accounts calls establishment costs (account 201).
Two accounting treatments are possible, and the choice has consequences:
| Treatment | Principle | Tax effect | Dividend distribution |
|---|---|---|---|
| Expenses of the period (preferred method) | The costs are charged to the year of formation. | Immediate deduction from the result. | No restriction linked to these costs. |
| Establishment costs as an asset | Recorded as an intangible asset (with no real value), at the top of the balance sheet. | Straight-line amortisation over a maximum of 5 years (annual charge of at least one fifth, at most one half). | Distribution in principle prohibited until the costs are fully amortised, unless sufficient free reserves exist. |
The preferred method, recommended by the chart of accounts, is to charge these costs directly as expenses. It is also, in most cases, the simplest and clearest choice. Recording them as an asset is only of interest in specific situations, for example when the founder wants to avoid weighing down an already loss-making first year and prefers to spread the charge.
For a breakdown of the items and their budget, see our estimate of the real cost of setting up a company in 2026 and our note on the cost and template of the 2026 legal notice.
Trade-off: spread the cost or deduct it at once?#
Two legitimate options coexist. Charging establishment costs as expenses gives an immediate deduction, ideal if the first year generates a result. Recording them as an asset and amortising them over five years smooths the charge, which can avoid worsening a carry-forward loss that is hard to offset. The point to watch: as long as the establishment costs remain on the asset side and are not fully amortised, you cannot in principle distribute dividends, unless you have sufficient free reserves. For a young company planning to push cash up quickly, recording them as an asset can therefore backfire.
VAT on prior expenses: recoverable, but subject to conditions#
The VAT charged on expenses incurred before registration or the start of activity is in principle deductible by the company, on three cumulative conditions:
- the expenses serve transactions giving rise to a right of deduction (General Tax Code, article 271);
- the invoice complies with the mandatory particulars (General Tax Code, article 289);
- the acts have actually been taken over by the company.
In practice, VAT prior to the date of liability is deducted on the turnover return for the first month of liability to VAT. The invoices must make it possible to establish the link with the company: this is the point that most often causes trouble.
In practice: before registration, ask your suppliers to draw up invoices in the name of the "company in formation" (or in the name of the founder acting on behalf of the company), with a consistent address. An invoice issued solely in the director's personal name, with no identifiable link to the company, weakens VAT recovery. Keep every supporting document: they are what evidences the right of deduction on the first return.
Special cases#
Not all pre-registration costs are treated the same way. A few situations deserve specific attention.
A durable asset bought before registration. Equipment, a vehicle, a piece of hardware bought before the company's birth is not an establishment cost. It is a fixed asset, amortised according to its nature and useful life. It joins the asset side like any fixed asset, and the impact on the result runs through depreciation, not an immediate expense.
Purely personal expenses. They are never deductible, whenever they were incurred. The boundary between a professional launch expense and a personal one is one of the most sensitive areas: a dinner, a trip, a mixed-use purchase made "for the project" does not become deductible merely because it preceded the formation.
The sole trader and the micro-enterprise. Here there is no separate legal entity, so no "takeover of acts" within the meaning of the Commercial Code. Under the actual-profit regime, the sole trader deducts justified professional expenses under ordinary rules. Under the micro regime, the flat-rate allowance is deemed to cover all expenses: there is no actual deduction of costs, whether incurred before start-up or not. To compare structures and their consequences, see our comparison SASU or EURL: how to choose.
| Situation | Nature | Treatment |
|---|---|---|
| Formation costs (registry, notice, fees) | Establishment costs (account 201) | Expense (preferred) or asset amortised over max. 5 years |
| Equipment, vehicle bought before registration | Fixed asset | Depreciation by nature and useful life |
| Rent, supplies, launch services | Operating expense, if the act is taken over | Expense of the period, deductible VAT |
| Personal expense | Non-professional | Never deductible |
2026 points to watch#
Recently, a founder consulted us after paying several thousand euros of equipment and rent during the two months preceding registration, without having drawn up a statement of acts or asked for invoices in the name of the company in formation. The takeover could eventually be organised by partners' decision, but at the cost of an extra meeting, and part of the VAT remained difficult to justify for want of correctly worded invoices. All of this would have been avoided by a statement of acts annexed to the articles from the outset. The lesson is constant: a takeover is never recovered after the fact as well as it is organised upfront.
In practice: the founder's checklist#
- Keep, from the first expense, a dated and quantified list of all the acts entered into on behalf of the company in formation.
- Ask for invoices in the name of the "company in formation" (or the founder acting on its behalf), with a consistent address.
- Annex the statement of acts to the articles, or provide a precise mandate for specified acts.
- Distinguish from the outset establishment costs, fixed assets and operating expenses.
- Decide on the accounting treatment of formation costs (expenses or asset) based on your first year and your distribution plans.
- Keep all supporting documents to recover VAT on the first VAT return.
- Set personal expenses aside without hesitation: they are never deductible.
For support on formation and the correct treatment of these costs, discover our company formation service in Paris and our bookkeeping and review engagement.
Frequently asked questions
Are costs paid before registration deductible by the company?+
Yes, provided the company formally takes over the corresponding acts, through one of the three mechanisms of the Commercial Code (statement of acts annexed to the articles, mandate, or partners' decision). Once taken over, the act is deemed to have been concluded by the company from the outset, and the cost becomes deductible according to its nature.
How does the company take over acts entered into before its formation?+
Three routes exist: annex to the articles a statement of acts carried out (signing the articles amounts to takeover upon registration), grant a mandate for specified acts, or have the takeover voted by the partners after registration. The first two routes are the safest because the takeover is automatic.
Can VAT paid before registration be recovered?+
Yes, in principle. VAT charged on expenses prior to liability is deductible if the expenses serve transactions giving rise to a right of deduction, if the invoices comply and if the acts are taken over. It is carried on the return for the first month of liability to VAT. The invoices must make it possible to establish the link with the company.
Should formation costs be expensed or capitalised?+
The chart of accounts' preferred method is to charge them as expenses of the period. Recording them as an asset under establishment costs remains possible, with straight-line amortisation over a maximum of 5 years, but it in principle blocks dividend distribution until those costs are fully amortised.
Is a computer bought before registration a formation cost?+
No. A durable asset (equipment, vehicle, hardware) is not an establishment cost but a fixed asset. It is recorded on the asset side and depreciated according to its nature and useful life. Only the duties, fees and formalities of formation fall under establishment costs.
Who is liable for debts incurred before registration?+
Until the company has taken over the act, the persons who acted in its name are personally and jointly liable for the resulting obligations (article L210-6 of the Commercial Code). The takeover then transfers the commitment to the company, with retroactive effect.
Can a sole trader take over their pre-formation costs?+
There is no takeover of acts for a sole trader, as there is no separate legal entity. Under the actual-profit regime, they deduct justified professional expenses under ordinary rules. Under the micro regime, the flat-rate allowance is deemed to cover all expenses: no actual deduction is possible.
Key takeaways#
- Before registration, founders are personally and jointly liable for the acts entered into (article L210-6 of the Commercial Code).
- The company only deducts these costs if it takes over the acts: statement annexed to the articles, mandate, or partners' decision.
- Formation costs are establishment costs (account 201): expenses under the preferred method, or an asset amortised over a maximum of 5 years.
- Input VAT is recoverable on the first VAT return, if the invoices comply and make it possible to establish the link with the company.
- A durable asset is a fixed asset, not an establishment cost; a personal expense is never deductible.
Firm registered with the Ordre des experts-comptables d'Île-de-France. Updated on 17 June 2026. This article provides general information and does not replace a review of your situation, your documents and the applicable rules. Every formation file deserves an individual analysis: feel free to consult us before incurring your first expenses.
Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
Regulated French accounting and audit firm based in Paris 8, built to support companies across France with a digital and decision-oriented approach.
Sources
Official and operational sources cited for this page.
This topic is part of our service Company formation in France | SASU, SAS, SARL
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