Electric car benefit in kind – a comparison
Perks like a company car complete the compensation package of an employee. Yet, offering a company car has financial consequences as it is a benefit in kind that must be integrated on the French payslip.
Both the employee and the employer will have to pay social contributions and payroll taxes on the value of the benefit.
Since 1 January 2020 a preferential scheme is applicable for electric cars provided by the employer to the employee. This scheme, initially introduced for a limited duration of two years, will remain in place for another two years until 31 December 2024.
The scheme mainly consists of two characteristics:
– Electricity expenses for the use of a charging station provided by the employer are neglected for the calculation of the value of the benefit in kind.
– A 50% abatement on the total value of a benefit in kind of the electric car is applicable, capped at € 1800 per year.
Taxable value of an electric car
Here an example of the calculation of the value of an electric car benefit.
Annuel cost (leasing rate, maintenance and insurance) : € 14 000
Flat sum evaluation rate : 30 % of the total annual cost
14 000 x 30 % = € 4 200
Application of the 50% abatement:
4 200 x 50 % = € 2 100, capped to € 1 800 per year
The electricity expenses for the recharge at a recharging station provided for the employer are neglected.
The value of the benefit in kind to be subject to social contributions and taxes is € 2 400 (€ 4 200 – € 1 800).
Electric car benefit vs. petrol car benefit
As a comparison, the calculation of the value of a petrol car benefit.
Annuel cost (leasing rate, maintenance and insurance) : € 14 000
Petrol expenses taken into charge by the employer : € 1 500, with a 40 % private usage
Flat sum evaluation rate : either 30 % of the total annual cost, plus private petrol expenses, or if the private usage is not tracked, a flat rate of 40%
14 000 x 30 % = € 4 200
€ 1 500 *40 % = € 600
The value of the benefit in kind to be subject to social contributions and taxes is € 4 800.
Or, as an alternative, if the private usage is not tracked, a flat rate of 40%, hence € 5 600 (€14 000 * 40%).
As can be seen from these examples, the value of the benefit in kind for a company car run on petrol is significantly higher than for an electric car.