Tightening taxes on company cars could bring in several billion euros for the State. One million cars in circulation is the number of company vehicles in France according to the General Secretariat for Ecological Planning. A significant volume since the French fleet of light vehicles is estimated at just under 40 million units. According to a recent report from the NGO T&E, company cars “cost” France 4 billion euros each year: “For comparison, if these 4 billion euros were used to finance social leasing at 100 euros, more than half a million French people would have access to an affordable electric car for 3 years”.
A problem for manufacturers
And above all, a hell of a windfall for manufacturers since these companies buy new vehicles for their employees who benefit from these benefits in kind, included in employment contracts. But will this tax loophole hold up over time?
At the beginning of October, discussions began in the Assembly on company cars. Objective: reduce the size and tax reductions in order to recover money. Lots of money. An employee who uses a company car costs the country dearly since this natural benefit replaces a salary supplement which would normally have generated social security contributions. Except that in the case of a company vehicle, these social security contributions, which also exist, are much lower: 30 to 40% for leasing and even 9 to 12% for a purchase. Percentages supposed to correspond to the share of private use of the vehicle by the employee. Far from the 100% contribution that an equivalent salary would have brought to the State.
The executive’s idea would therefore be to increase the contributions for a leasing company vehicle to 60% according to Les Echos. A percentage more in line with the employee’s actual private use of the vehicle. Which would mean a reduction in net salary for the employee and higher costs for the employer. This would bring 2.2 billion euros to the French government.
The end of privileges for electric cars?
As bad news does not come alone, the increase in contributions on company cars could be accompanied by an increase in taxes on electric cars used by employees. Since 2020, these models have benefited from a 50% reduction in social security contributions (capped at €1,800/year), allowing them to be more competitive than thermal or hybrid models. for the company and the employee. In addition, electricity costs which are paid by the employer are not taken into account in the calculation of the benefit in kind. Double bonus!
But the Ministry of Finance is looking for money wherever it can find it, and this decree could pay the price. If it is not renewed, the tax advantage for electric cars in company cars could end on December 31. Concretely, in 2025, social contributions on electric company cars would therefore be doubled! And when we know that more than one in two new cars is sold to professionals, we can fear a slowdown in the market in an already very tense context where electric cars are plateauing. Without forgetting the very possible reduction in the purchase bonus.
