Company Car and Benefit in Kind 2026: Flat Rate, Actual Method and the 1 February 2025 Shift

Updated 12 May 2026. Providing a vehicle to a director or an employee for personal use constitutes a benefit in kind (avantage en nature — AEN), integrated into the gross pay subject to URSSAF social contributions, CSG/CRDS and the beneficiary's income tax. The decree of 25 February 2025 reshuffled the rules: the flat rate has risen from 9% to 15% for vehicles purchased less than 5 years ago, and from 6% to 10% beyond. On the electric side, the rebate has been raised from 30% to 70% of the flat rate, subject to an annual cap. For an SAS director, an SARL manager or a CFO in Paris, the 2026 trade-off is no longer simply "flat rate versus actual": it now incorporates the year of acquisition, the powertrain, employer-paid fuel and the legal boundary between a company car and a service car.

Article L242-1 of the Social Security Code and the decree of 25 February 2025#

The AEN is rooted in Article L242-1 of the French Social Security Code, which folds any payment or advantage granted in consideration of work into the contribution base. Its flat-rate evaluation is set by the decree of 10 December 2002, most recently amended by the decree of 25 February 2025 published in the Official Journal on 27 February 2025. This amendment hits two bases: the percentage of the purchase price including VAT for owned vehicles, and the percentage of the total annual cost for leased vehicles. The URSSAF's BOSS handbook has aligned its commentary in the version applicable from 1 February 2025.

Company car versus service car: the legal boundary#

A company car is permanently allocated to the beneficiary, who may use it for home-to-work commutes and private purposes (weekends, holidays, family trips). It triggers an AEN. A service car is strictly professional: private use is explicitly forbidden, the vehicle is returned in the evening and over the weekend to a company location, and an internal document (service note, internal regulations) formalises that restriction. In the latter case, no AEN is due. URSSAF litigation focuses on this boundary: if the vehicle is kept at the employee's home outside working hours, the inspector presumes private use and reassesses, absent counter-evidence (logbook, telematics, written employer attestation).

Application to vehicles allocated before 1 February 2025#

The URSSAF's BOSS handbook clarified that vehicles allocated before 1 February 2025 retain the previous scale (9%, 6%, 12%, 9%, 30%, 40%) for the entire duration of the initial allocation. The switch to the new scale (15%, 10%, 20%, 15% on leases) applies only to vehicles allocated from 1 February 2025 onwards. This grandfather clause effectively splits the fleet of every Paris-based SME in two: the German saloon purchased in June 2024 stays at 9%, while its successor acquired in March 2026 jumps to 15%. The combined contributions + income tax gap can exceed €1,800 per year on a vehicle priced at €45,000 including VAT.

Owned vehicle: 15% or 10% depending on age#

For a vehicle owned by the company, the flat rate applies to the purchase price including VAT (net of discounts):

• Vehicle less than 5 years old (counted from first registration): 15% of the purchase price including VAT, per year.
• Vehicle more than 5 years old: 10% of the purchase price including VAT, per year.

Worked example: an internal combustion vehicle purchased at €35,000 including VAT in March 2026, allocated to a manager. Annual AEN = 35,000 × 15% = €5,250, i.e. €437.50 per month added to gross pay. The same vehicle under the pre-2025 scale would have stood at 9%, i.e. €3,150 per year. The €2,100 gap in the contribution base is taxed socially at roughly 22% on the employee side, 45% on the employer side, and fiscally at the beneficiary's marginal income tax rate.

Leased vehicle: 15% of the total cost#

For a vehicle under long-term lease (LLD) or lease with option to purchase (LOA), the flat rate applies to the total annual cost (lease payments including VAT + maintenance + insurance, fuel excluded) and rises to 15% from 1 February 2025 (previously 9%). This change materially alters the tax treatment of the LOA, until now widely used by SAS structures to soften the AEN impact. Example: an LOA on a saloon at €850 per month including VAT, €600 of maintenance per year, €1,100 of insurance per year. Total annual cost = €12,000. Flat-rate AEN = 12,000 × 15% = €1,800. If the lessor has bundled fuel into the package, the increased flat rate (see below) brings the figure to 12,000 × 20% = €2,400.

Employer-paid fuel: increased flat rate#

When the employer covers fuel used for private purposes (open fuel card, reimbursement of personal invoices, unlimited refilling on the company account), the flat rate is increased:

• Vehicle purchased < 5 years: 20% of the purchase price including VAT (instead of 15%).
• Vehicle purchased > 5 years: 15% of the purchase price including VAT (instead of 10%).
• Leased vehicle: 20% of the total annual cost (instead of 15%).

Alternative to the increased flat rate: stick with the standard flat rate excluding fuel and declare separately the actual value of private fuel provided. For large fleets, the increased flat rate is simpler administratively; for a single director with limited personal driving, the actual fuel calculation may be more economical.

Step-by-step calculation#

The actual method rebuilds the private fraction of the vehicle's costs. The applicable formula varies according to ownership mode.

Owned vehicle: Annual depreciation (20% of the cost including VAT over 5 years for a vehicle under 5 years old, then 10% beyond) + annual insurance + actual maintenance costs + cost of fuel provided where applicable. The private share is then applied, measured from a logbook or a telematics system: AEN = (Total costs) × (private km / total km), supplemented by the full amount of fuel provided for purely private trips.

Leased vehicle: Annual lease payments including VAT + maintenance + insurance + fuel provided where applicable. The private share is applied using the same method.

Documents to retain#

To make the actual method enforceable in a URSSAF audit, the company must be able to produce:

• The purchase or lease contract, including price with VAT and options.
• The first-registration invoice to validate the start date of the 5-year clock.
• The maintenance, insurance and fuel invoices for the financial year.
• A detailed logbook (date, opening and closing odometer reading, professional or private purpose) or the output of a geolocation system.
• The pay slip carrying the AEN line in the gross-pay column.

Without a logbook, the actual method is unenforceable and URSSAF will automatically substitute the flat-rate method — generally less favourable when private use is limited.

When the actual method beats the flat rate#

The actual method becomes relevant in three main configurations. First, when the purchase price is high but private use is low: a sales manager covering 40,000 km per year of which 5,000 are private will see a private share of 12.5%, well below the flat rate. Second, for older vehicles already fully depreciated: the actual base shrinks to maintenance and insurance, whereas the flat rate keeps applying to the original purchase price. Third, for director vehicles where the family also owns a personal car used primarily for private trips: the private share of the business car can be far below 30%.

70% rebate and 2026 cap#

To support low-carbon mobility, the decree of 25 February 2025 reinforced the preferential regime for fully electric vehicles allocated between 1 February 2025 and 31 December 2027: the AEN amount (whether calculated flat-rate or actual) benefits from a 70% rebate, subject to an annual cap revalued each year. Per BOSS publications updated in early 2026, this cap stands at approximately €5,124 per year per vehicle. The recipient of a Tesla Model Y priced at €55,000 sees their AEN cut from 55,000 × 15% = €8,250 down to 8,250 × 30% = €2,475, within the cap. The combined contributions + income tax saving frequently exceeds €3,000 per year for a manager in the 41% marginal bracket.

Home charging station: neutralised until 2027#

Installing a charging station at the employee's home, funded by the employer, is neutralised fiscally and socially until 31 December 2027 under the URSSAF BOSS commentary updated in early 2025: neither the investment nor any maintenance costs constitute an additional AEN during this period, provided the station remains assigned to the business vehicle that has been allocated. For individuals self-financing a home station, a separate tax incentive exists — see our dedicated note on the charging-station tax credit.

Electricity costs and charging cards#

Electricity costs borne by the employer — whether through public charging via a card (TotalEnergies, Chargemap, Tesla Supercharger) or home charging reimbursed against receipts — are not counted within the AEN of fully electric vehicles until 31 December 2027. This neutralisation does not extend to plug-in hybrid vehicles (PHEV): for a PHEV, the general rules apply (increased flat rate where fuel + electricity are provided, no 70% rebate).

Inclusion in the URSSAF contribution base#

The vehicle AEN flows into the gross pay subject to contributions at each payroll cycle (typically monthly). The amount is smoothed: an annual AEN of €5,250 corresponds to €437.50 per month. This figure bears employer contributions (around 42 to 45% depending on the applicable schedule) and employee contributions (around 22 to 24%), just like a cash salary supplement. The URSSAF computation is strictly the same for a salaried director (SAS president, minority or equal SARL manager) as for a non-director employee.

CSG/CRDS and income tax#

The AEN is subject to CSG (9.2%) and CRDS (0.5%) on 98.25% of its value (deduction for professional expenses). For income tax, the AEN is incorporated into the beneficiary's taxable income in the "salaries and wages" category. For a director already in the 41% marginal bracket, the AEN of a €45,000 vehicle (€6,750 per year) adds €2,768 of annual income tax. This crowding-out effect makes the comparative analysis between company car, mileage allowance and salary increase essential before any decision.

Presentation on the pay slip#

The AEN appears on the pay slip both in the base subject to contributions (amount added to gross pay) and in a deduction from net pay (amount subtracted to avoid generating a cash disbursement). This dual entry is mandatory to make the mechanism enforceable in an audit. Forgetting an AEN in payroll is one of the most frequent URSSAF reassessment grounds we observe in Paris engagements, with recovery over 3 years (the URSSAF limitation period) increased by penalties. Our Paris 8 accounting and audit team systematically includes an annual AEN consistency review for payroll files.

Abolition of TVS and new annual taxes#

The TVS (tax on company vehicles) was abolished on 1 January 2022 and replaced by two distinct annual taxes:

• The annual tax on CO₂ emissions (Article 1010 of the General Tax Code), calculated under the WLTP schedule applicable from 1 January 2024, then tightened in 2025 and 2026. The 2026 schedule penalises more heavily vehicles above 161 g CO₂/km WLTP, with annual amounts that can exceed €4,000 per vehicle for high-end thermal SUVs.
• The annual tax on atmospheric pollutant emissions (Article 1011 of the General Tax Code), replacing the former "age" component of the TVS and hitting mainly older diesel vehicles. The 2026 annual tariff per vehicle ranges from €100 to €500 depending on the Euro standard and the powertrain.

Fully electric vehicles are exempt from both annual taxes.

Depreciation cap and non-recoverable VAT#

The accounting depreciation of a passenger car is fiscally capped (the excess is added back outside the accounts). Caps in force in 2026, codified in Article 39, 4 of the General Tax Code:

• €9,900 for vehicles emitting > 165 g CO₂/km WLTP.
• €18,300 for vehicles between 60 g and 165 g CO₂/km WLTP.
• €20,300 for vehicles between 50 g and 59 g CO₂/km WLTP.
• €30,000 for vehicles ≤ 50 g CO₂/km WLTP.

VAT on the purchase or lease of a passenger car is not recoverable (Article 206 IV-2 of Annex II of the General Tax Code), save for strictly defined exceptions: N1-classified utility vehicles, public passenger transport vehicles (taxis, VTCs under certain conditions), driving-school vehicles.

Articles 1010 and 1011 of the General Tax Code#

The detailed computation of the two annual taxes is handled through a specific return (form 3310-A appended to the VAT return for taxpayers under the actual regime). The 2026 vintage confirms the gradual unceiling of the WLTP schedule for thermal vehicles beyond 215 g CO₂/km. An annual fleet audit at year-end is now indispensable for companies operating more than five vehicles. Our outsourced CFO service for startups and SMEs in Paris embeds this CO₂ tax + pollutant tax mapping into quarterly reporting.

The trade-off — company car, service car or mileage allowance#

In the files we handle in Paris, three scenarios coexist in 2026. First scenario: significant private use (weekends, holidays, family trips), director in the 41% or 45% marginal bracket. The fully electric company car is the dominant option, thanks to the 70% rebate combined with exemption from the CO₂ tax. Second scenario: strictly professional use with vehicle returned to headquarters each evening. The service car (no AEN) is legally the right answer, provided the prohibition on private use is formalised in the internal regulations. Third scenario: personal vehicle used occasionally for professional missions. The mileage allowance (indemnité kilométrique, IK) on the 2026 URSSAF schedule is often more economical than having the company own the vehicle, especially for a self-employed director (TNS) with annual professional mileage below 12,000 km.

The underestimated risk — the 02/2025 shift and plug-in hybrids#