New Rules for the Valuation of Company Cars in France

What valuation rates apply until January 31, 2025?

Until January 31, 2025, the valuation of the benefit in kind related to the provision of a vehicle by the employer is determined based on the type of acquisition of the vehicle.

For a purchased vehicle, the valuation is based on 9% of the purchase price, and 6% if the vehicle is more than five years old. If the employer covers the fuel costs, a flat rate of 12% of the purchase price is applied, or 9% for vehicles older than five years.

For a leased vehicle, including lease-to-own (LOA), the valuation is based on 30% of the total annual costs, including rent, maintenance, and insurance. If the employer covers the fuel costs, a flat rate of 40% of the total annual costs can be applied.

What are the new regulations as of February 1, 2025?

Article 3 of the regulation from February 25, 2025, regarding the valuation of benefits in kind  outlines the new valuation methods for benefits related to vehicles. Starting from February 1, 2025, the valuation of company car benefits will be adjusted with increased rates.

For a purchased vehicle, the benefit will now be valued at 15% of the purchase price, and 10% for vehicles older than five years. If the employer covers the fuel costs, a flat rate of 20% of the purchase price will be applied, or 15% for vehicles older than five years.

For a leased vehicle, including lease-to-own (LOA), the valuation will be increased to 50% of the total annual costs, including rent, maintenance, and insurance. If the employer covers the fuel costs, a flat rate of 67% of the total annual costs will be applied.

What benefits apply to electric vehicles?

For vehicles that run exclusively on electricity, a special allowance applies, which varies depending on the date of delivery.

For vehicles provided between January 1, 2020, and January 31, 2025, the benefit in kind vehicle is reduced by 50%, with an upper limit of €2,000.30 per year. Additionally, electricity costs incurred by the employer for charging the vehicle are not included in the valuation of the benefit.

For vehicles provided between February 1, 2025, and December 31, 2027, the reduction will be increased to 70%, with an annual cap of €4,582. As in the previous period, the electricity costs paid by the employer for charging the vehicle will not be included in the benefit in kind valuation.

Summary of valuation rates for company cars: before and after February 2025

Note: The reform affects company cars purchased or leased from February 1, 2025. The new regulation only applies to employees receiving a new company car. Employees who already own a company car are not affected by this change.

What impact does this have on companies?

With the new regulation on the valuation of benefits in kind from February 1, 2025, employers must consider the financial implications of providing company cars. The increase in valuation rates will lead to an increase in the tax and social costs of these benefits, requiring adjustments to vehicle fleet policies. This development may encourage companies to prioritize electric vehicles, as they represent a more tax-advantageous option compared to conventional vehicles, due to the favorable tax deduction.