Company cars in France: the 2026 benefit in kind, VAT and annual taxes

How do you calculate the benefit in kind of a company car in 2026?

Private use of a company car is a benefit in kind subject to contributions, valued at a flat rate or at actual cost under the order of 25 February 2025, which has replaced the order of 10 December 2002 since 1 February 2025. The scale depends on the vehicle's assignment date stated in the agreement with the employee.

If the employer pays for fuel, it can also use the basic flat rate plus actual private fuel, on invoices. For a leased vehicle, the benefit cannot exceed that of a purchase, calculated on the price including VAT paid by the lessor (discounts counted up to 30% of the recommended price). At actual cost, you take the annual cost (20% depreciation, 10% after 5 years, or lease payments, plus insurance and servicing) in proportion to private kilometres, plus the private fuel paid. The employee's financial contribution is deducted from the benefit valued at a flat rate.

Worked example used throughout this page: a petrol passenger car bought for €30,000 excluding VAT (€36,000 including VAT) on 1 January 2026 and provided to an employee all year. The employer pays for servicing (€1,000 excluding VAT) and fuel: €1,800 excluding VAT for business journeys, €600 excluding VAT for private fill-ups (€720 including VAT). 2026 benefit: 15% × €36,000 = €5,400, plus €720 of private fuel, i.e. €6,120, compared with €7,200 under the 20% overall flat rate.

Electric cars: the 70% reduction and its conditions

For a 100% electric car provided between 1 February 2025 and 31 December 2027, the flat-rate benefit is reduced by 70%, up to €4,641.60 a year in 2026, provided the car meets the environmental score required for the ecological bonus. For an electric car provided between 1 January 2020 and 31 January 2025, the reduction remains 50%, capped at €2,026.30 in 2026.

Electricity paid for by the employer is not included in the benefit, and charging at a workplace charging point creates none until 31 December 2027.

Example: an electric car costing €40,000 including VAT, with the environmental score, provided in 2026: 15% × €40,000 = €6,000, less the 70% reduction (€4,200, below the cap), i.e. €1,800 a year subject to contributions.

Which VAT can you recover on a company car?

VAT cannot be recovered on vehicles designed to carry people or for mixed use that are fixed assets, nor on their parts and accessories (art. 206, IV-2-6° and 7° of Annex II to the CGI, the General Tax Code). Every category M vehicle is excluded whatever its body type, except ‘DERIV VP’ vehicles; a category N vehicle is not, except a pick-up with at least 2 rows of seats, another body type with at least 3 rows, or a vehicle with a motor-caravan-type living compartment.

VAT on LPG (liquefied petroleum gas) for business journeys remains deductible, even for a passenger car, but not VAT on that car's lubricants. The exclusion does not apply in particular to vehicles with more than 8 seats carrying staff, public passenger transport, driving schools and vehicles hired out under a lease subject to VAT, the exception used by the ruling described below. Lastly, if the VAT on a van was deducted, its free private use by an employee is taxed as a supply to oneself (art. 257, II-2° of the CGI).

In the worked example, with no contribution from the employee: the VAT on the purchase (€6,000) and on servicing (€200) cannot be recovered; of the €360 of VAT on business fuel, €288 is deductible (80%); the €120 of VAT on private fill-ups is not.

Recharging private use to the employee: what the ruling of 30 April 2025 changes

Since tax ruling BOI-RES-TVA-000161 of 30 April 2025, which applies judgment C-288/19 of the Court of Justice of the European Union, everything depends on one question: does the employee pay a stipulated contribution for their company car?

• Stipulated contribution: a sum paid, a deduction from gross or net salary or the waiver of a credit convertible into salary, provided for in the employment contract or in a separate contract. Making the car available then becomes a lease subject to VAT, whatever the amount, even below the vehicle's cost.
• Taxable amount and return: VAT is charged on the rent or the portion of salary waived, with no reduction for business use, and the employer declares it under the ordinary rules (art. 287 of the CGI). The benefit in kind calculated for income tax is not rent.
• Deduction: if the vehicle is intended from its acquisition to be made permanently available against a contribution, the purchase VAT is fully deductible, with no reduction for private use. If it was first used for general business activity, the deduction takes the form of an overall adjustment for the remaining years (art. 207, III of Annex II to the CGI). If the vehicle is later assigned to an excluded use, a taxable self-supply arises (art. 257, II of the CGI): plan for the end of the lease.
• No stipulated contribution: there is no lease; if the vehicle's VAT was excluded, private use is not taxed.

In the first year, the VAT recovered on the purchase (€6,000) exceeds the VAT paid over on the contribution (€300) by €5,700; in later years, the employer pays over €300 of VAT a year. An employer established in another Member State, for example Luxembourg, owes French VAT on the stipulated contribution of an employee living in France, with an option to use the OSS (One-Stop-Shop) scheme. Conversely, for an employee living in another Member State, the lease is taxable in that state.

2026 annual CO2 and pollutant taxes: how much and when to declare?

A petrol company car with a Crit'Air 1 air-quality sticker, emitting 120 g of CO2 per kilometre under the WLTP standard, assigned all year in 2026, costs €513 in annual taxes. These two taxes, on CO2 and on air pollutants, apply to passenger vehicles assigned to economic activity and replaced the company car tax (TVS). They cover category M1 cars and some N1 vans, such as a van with at least 3 rows of seats or a pick-up with at least 5 seats (Code des impositions sur les biens et services, art. L.421-93 to L.421-167). These criteria are not the VAT criteria: classify each vehicle under both regimes. Amount: annual proportion of assignment multiplied by the rate. Exemptions include electric or hydrogen vehicles, vehicles of sole traders and hires of one month or 30 days at most.

Calculation for 120 g/km: 0 + 41 + 16 + 96 + 80 + 150 = €383 of CO2 tax, plus €130 of pollutant tax (Crit'Air 1). That tax is €650 for the most polluting vehicles and €0 for an electric car; it will rise to €160 and €800 in 2027.

Personal vehicles for which the company pays mileage allowances also count beyond 15,000 km reimbursed a year (100% coefficient above 45,000 km), with a €15,000 reduction (EU de minimis rules). The 2026 taxes are declared in January 2027 on form 3310-A-SD under the standard real VAT regime, or on annual return 3517 under the simplified regime; the annual summary statement per vehicle, exempt ones included, must be up to date when the return is filed. Since 1 March 2025, fleets of at least 100 vehicles also owe an annual incentive tax if they take on too few low-emission vehicles (18% target in 2026).

Fines and depreciation: two obligations not to forget

When an offence is recorded by an automatic enforcement device (speed camera) with a car registered to or held by the company, its legal representative must give the driver's identity and address within 45 days of the notice of offence being sent or delivered, by registered letter with acknowledgement of receipt or online, except in case of theft, number plate fraud or force majeure. Otherwise, they face a 4th-class fine, or a 5th-class fine when the offence is a délit (a more serious offence), since 31 December 2025 (art. L.121-6 of the Highway Code).

For tax on business profits, depreciation of a passenger car acquired or leased since 1 January 2017 is deductible only up to a ceiling set according to its CO2 emissions: from €9,900 for the highest emitters to €30,000 for the lowest, including electric cars (art. 39, 4 of the CGI). The same limit applies to the share of lease payments, except for non-renewable short-term hires of 3 months or less. Mileage allowances: see our page on expense claims in France.

Common mistakes

• Applying the old rates (9%, 12%, 30%, 40%) to a vehicle provided since 1 February 2025, or the new ones to an older vehicle.
• Applying the 70% reduction to an electric car that did not meet the environmental score on the day it was provided.
• Deducting VAT on long-term lease payments or on the servicing of a passenger car.
• Assuming an informal deduction is enough: without a stipulated contribution, there is no lease; with one, VAT must be charged.
• Treating a pick-up with at least 2 rows of seats or a van with at least 3 rows as an ordinary commercial vehicle for VAT: their VAT is excluded, as for a passenger car.
• Paying the fine in the company's name instead of naming the driver within 45 days.

Your checklist

• Record the date each vehicle was provided, to apply the right scale.
• Calculate the benefit in kind each month, deduct the employee's contribution and apply the electric reduction within its annual cap.
• Check an electric car's environmental score before providing it.
• Classify the fleet by category (M1, N1, body type, rows of seats) for VAT and the annual taxes.
• Set out the employee's contribution in the contract or an amendment, then charge and declare the corresponding VAT.
• Decide at purchase whether the vehicle is intended to be provided against a contribution.
• Keep the annual summary statement per vehicle and declare the 2026 taxes, in January 2027 under the standard real VAT regime.
• Keep a dated register of assignments so that you can name a driver within 45 days.

Frequently asked questions

Official sources

• Légifrance, order of 25 February 2025 on the valuation of benefits in kind
• URSSAF, benefits in kind (vehicles, electric cars, charging points)
• BOFiP, VAT, vehicles designed to carry people BOI-TVA-DED-30-30-20
• BOFiP, VAT, petroleum products BOI-TVA-DED-30-30-40
• BOFiP, VAT, services relating to excluded goods BOI-TVA-DED-30-30-70
• BOFiP, tax ruling BOI-RES-TVA-000161 of 30 April 2025 (vehicles provided to employees)
• Service Public Entreprendre, taxes on assigning passenger vehicles to business use (CO2 and pollutants)
• BOFiP, annual incentive tax BOI-AIS-MOB-10-30-40
• BOFiP, depreciation of passenger vehicles BOI-BIC-AMT-20-40-50
• Légifrance, Highway Code, articles L.121-1 to L.121-6

This guide sets out the general rules in force on 5 October 2026. It is not legal advice for your situation (collective agreement, sector, employee status).