Company car in France: The private use is a benefit in kind and as such subject to contributions and payroll taxes.
Many employees appreciate a company car as a nice perks. Especially if your employee travels frequently for business, it will complete the total compensation package. If your company is struggling to attract talent, it is something to consider.
Company Car in France: evaluation of fringe benefit
Offering a company car will have a financial impact as it is a benefit in kind that is subject to contributions and payroll taxes. In France, employers have a choice between a flat rate evaluation and actual costs. The choice has to be made in the beginning of the year and has to be maintained for the calendar year.
Evaluation based on actual costs
Whether it is a purchased or leased vehicle, prerequisite for an evaluation based on actual expenses is the complete documentation of private and business mileages.
The ratio between private and total mileages, together with the annual expenses, will determine the value of the benefit in kind.
Annual expenses
| Purchased vehicle less than 5 ans | Purchased vehicle > 5 ans | Leased vehicle |
|---|---|---|
| Amortization, taxes included, of 20 % | Amortization, taxes included, of 10 % | Total annual leasing costs |
| Car insurance |
| Maintenance, including taxes (tires, oil changes, …) |
Lastly, the costs of fuel for private use are added if these are paid by the employer.
Flat sum evaluation of French company car
As a means of simplification, many employers opt for the flat sum as its evaluation is less time-consuming. The calculation differs depending on whether the employer takes in charge the private fuel expenses or not.
Annual expenses – no fuel refunds by employer
| Purchase vehicle less than 5 ans | Purchase vehicle > 5 ans | Leased vehicle |
|---|---|---|
| 9 % of car purchase price | 6 % of car purchase price | 30% annual leasing costs plus insurance & maintenance * |
*limited to the value of the purchase vehicle
Annual expenses – fuel refunds by employer
| Purchase vehicle less than 5 ans | Purchase vehicle > 5 ans | Leased vehicle |
|---|---|---|
| 9 % of car purchase price, plus actual fuel expenses | 6 % of car purchase price, plus actual fuel expenses | 30% annual leasing costs plus insurance & maintenance*, plus actual private fuel expenses |
| 12 % of car purchase price (flat rates includes fuel expenses) | 9 % of car purchase price (flat rates includes fuel expenses) | 40% annual leasing costs plus insurance & maintenance* (flat rates includes fuel expenses) |
*limited to the value of the purchase vehicle
The prorata monthly value of the benefit in kind is integrated on the French payslip.
Preferential scheme for electric vehicles
Since 1 January 2020 a preferential scheme exists for the calculation of the benefit in kind for electric cars. This scheme, initially introduced for two years, will remain in place until 31 December 2024.
It mainly consists of an 50% abatement on the total value of a benefit in kind, capped at € 1800 per year.
How much social contributions are paid on the company car benefit?
The employee deductions are about 21 – 23% on the value of the company car, plus the employee’s taxes. As for the employer contributions and payroll taxes in France, these depend on other variables. They can vary between 3% and 46 %.