Company Car and Benefit in Kind: The Executive's Guide

The Vehicle Benefit in Kind, Precisely

Making a car available to a company director does not, in itself, create a benefit in kind. What triggers it is private use: as soon as the vehicle can be used outside the strict professional framework — home-to-work commuting, weekends, holidays — the tax authorities consider that the company is covering a personal expense of the beneficiary. This benefit then becomes additional remuneration, with the accompanying social and tax consequences.

The key distinction is between the company car ("véhicule de fonction"), whose private use is authorised and which generates a benefit in kind, and the service vehicle ("véhicule de service"), reserved for professional activity and which generates none — provided this can be demonstrated (written clause, return of the vehicle at weekends, absence of private use). For a company director, this boundary is rarely watertight: an executive's car is almost always a company car, and must be treated as such.

That leaves the question of who is concerned. A chairman of a SAS or SASU, a minority or equal-shareholder manager of a SARL, are treated as assimilated employees: their benefit in kind follows the employee regime. A majority-shareholder manager falls under the self-employed workers' regime, with treatment similar in principle but distinct in its terms. In all cases, the benefit must be assessed, declared, and borne.

Flat Rate or Actual Costs: The Trade-off

Two methods coexist for calculating the benefit, and the choice is not neutral.

The flat-rate method applies a percentage to a known base — the purchase cost or the annual rental cost. It has the merit of simplicity and predictability: no mileage tracking, a stable value from one month to the next.

The actual-cost method reconstructs the cost actually borne by the company, then retains only the share corresponding to private use, in proportion to the mileage driven. It requires meticulous record-keeping: logbook, mileage statements, retention of supporting documents. It becomes advantageous when private use is low relative to total mileage.

The employer may choose the more favourable method, vehicle by vehicle, and revise this choice each year. For a director who drives a great deal for professional purposes, the actual-cost method can lighten the taxable base; for one seeking clarity, the flat rate prevails. According to URSSAF, it is indeed up to the employer to make and justify this choice.

The Flat-Rate Scale Since February 2025

This is the point every director and every CFO must keep in mind: the flat-rate scale has been substantially revised. The decree of 25 February 2025 raises the rates for vehicles made available from 1 February 2025. Vehicles made available before that date retain the former scale: two regimes thus coexist, and the date of availability becomes a detail requiring careful tracking.

For a purchased vehicle, the annual flat-rate benefit rises to 15% of the purchase cost including tax (10% if the vehicle is more than five years old), compared with 9% and 6% previously. If the employer also covers fuel for private use, the rate rises to 20% (15% beyond five years), unless actual fuel costs are added to the base flat rate.

For a rented or long-term rental vehicle, the benefit is now assessed at 50% of the total annual cost — that is, the rent, maintenance, and insurance, all taxes included — compared with 30% under the former regime. With fuel covered, the base reaches 67% of the total cost, or 50% plus actual fuel costs.

The increase is substantial: on an executive saloon, moving from 30% to 50% of the annual cost significantly changes the taxable base. Hence the value of auditing one's existing fleet and, for any new vehicle made available, factoring in this scale from the outset. Detailed, regularly updated tables are compiled by payroll reference sources such as LégiSocial.

Electric and Hybrid: The Decisive Allowance

Legislators have maintained a favourable regime for electric vehicles, and this is probably the most powerful lever available to a director. For a vehicle running exclusively on electricity, made available between 1 February 2025 and 31 December 2027, the flat-rate benefit in kind qualifies for a 70% allowance, capped at €4,582 per year in 2025 (€4,641.60 in 2026).

Two conditions and one nuance deserve attention. First, the vehicle must meet a minimum environmental score, aligned with eligibility for the ecological bonus: not all electric models automatically qualify. Second, electricity costs incurred by the employer for charging, such as providing a charging point, are excluded from the taxable base, whether the assessment is flat-rate or actual-cost.

Beware, however, of a common confusion: plug-in hybrids do not benefit from this allowance. They are treated as combustion-engine vehicles. For a director choosing between a plug-in hybrid model and an eligible 100% electric one, the difference in social treatment can weigh heavily in the decision — just as much as budget or actual use.

The Real Cost for the Director

The benefit in kind is not a neutral gift: it is remuneration in kind. As such, it falls within the base for social security contributions and within the beneficiary's taxable income.

For a director treated as an employee, the benefit appears on the payslip, bears employee contributions, and increases taxable net income: the director thus pays tax on a benefit not received in cash. For a majority-shareholder manager, the benefit is added to remuneration subject to self-employed workers' contributions. In both cases, undervaluing the base exposes the company to a reassessment, and the old reflex of applying a 9% rate to a recent vehicle is now a costly mistake.

This is precisely where an eligible electric vehicle takes on its full significance: the 70% allowance mechanically reduces the social and tax base borne by the director, for often identical use. A model such as the Audi S5, or a prestige saloon for executive use, is worth considering as much for its benefit-in-kind scale as for its technical specifications.

The Real Cost for the Company

On the company side, the benefit in kind bears employer contributions, and its financing follows its own deductibility rules.

Long-term rental payments constitute deductible external charges against profit. But the deduction is not unlimited: the portion of the rent corresponding to the vehicle's depreciation is capped according to CO2 emissions, following the depreciation rules described in the BOFiP. The usual caps are set at €30,000 (under 20 g/km), €20,300 (20 to 59 g), €18,300 (60 to 155 g), and €9,900 beyond that. The excess portion is reintegrated for tax purposes each year, for the entire duration of the contract.

Added to this are the taxes on the use of passenger vehicles, which have replaced the former TVS: an annual tax on CO2 emissions and an annual tax on air pollutant emissions, detailed by Service-Public. Fully electric vehicles are exempt from the CO2 tax. The equation is coherent: the same choice — an eligible premium electric vehicle — optimises both the benefit-in-kind base, the deductibility caps, and fleet taxation.

Long-Term Rental, a Clear Equation

This is where EVO LUXURY's model makes sense. Under an all-inclusive long-term rental agreement, the company does not carry the vehicle on its balance sheet and does not have to manage residual value or resale.

Above all, the basis for the benefit in kind becomes crystal clear. The rental flat rate applies to the total annual cost: rent, maintenance, insurance. This is precisely the scope of a premium all-inclusive contract. A rent, a known base, a predictable benefit in kind: the director and the CFO have a stable figure at their disposal, without having to reconstruct scattered expenses. Included services — maintenance, assistance, insurance — avoid ancillary costs requiring restatement, and an electrified high-end fleet opens access to the allowance.

Whether the choice falls on a prestige saloon, a premium SUV as an executive reference, or a signature model such as the Mercedes S-Class, the logic remains the same: a clear contractual framework in the service of a well-managed tax equation.

The Director's Roadmap

In summary, a few reflexes make it possible to secure the matter durably:

• Qualify the use: company car or service vehicle, and document the corresponding clause.
• Choose the method — flat rate or actual cost — vehicle by vehicle, and revise it each year.
• Check the date the vehicle was made available to apply the correct scale, before or after 1 February 2025.
• Favour an eligible electric vehicle to capture the 70% allowance and fleet exemptions.
• Anticipate the tax reintegration linked to deductibility caps based on CO2 rate.
• Track the benefit on the payslip or the director's remuneration.
• Have the arrangement validated by your chartered accountant before any vehicle is made available.

Well structured, a company car remains a formidable tool for remuneration and brand image. Poorly calibrated, it exposes the company to a contribution reassessment and unnecessary taxation. Between the two, the difference lies in the rigour of the calculation and the clarity of the contract.

This article presents the general framework for vehicle benefit in kind as of the publication date and does not constitute personalised tax or social advice. Scales, caps, and eligibility conditions change regularly. Before making any decision, please confirm your situation with your chartered accountant or advisor.