French VAT on Company Car Fleets: Risks and Opportunities

In a recent ruling dated April 30, 2025, the French tax authorities adopted an official position on the liability and deductibility of VAT on company car fleets, aligning themselves with European case law.
More specifically, this concerns the provision of company vehicles to employees.

VAT Due on the Provision of Vehicles to Employees

Recent case law indicates that when there is a consideration for the private use of company vehicles by employees, such provision should be regarded as a supply of services for consideration. This service is therefore subject to VAT.
In practice, this means that the private use of company vehicles by employees residing in France could make companies – whether French or foreign – liable for French VAT on the personal portion of vehicle use.

VAT Deductible on Company Car Fleets

This position also opens up a valuable opportunity for businesses: the possibility to deduct input VAT on expenses related to passenger vehicles (purchase, leasing, repairs), which until now were excluded from the right to deduct in France, except in certain cases.
The tax authorities also specify that this VAT deduction would be possible without a pro rata reduction based on the duration of private use.

Specific Cases of VAT Liability on Company Car Fleets

Special attention should be paid by companies that have already deducted or are deducting input VAT on their company vehicles. Indeed, making these vehicles available to employees for private use is considered a supply of services for consideration, even in the absence of consideration.
As for shuttle services provided by companies to transport employees to their workplace, the conditions of their implementation must be assessed in order to determine the applicable VAT regime.

VAT Opportunities for Company Car Fleets

Given the broad interpretation of both the notion of “consideration” and its practical arrangements for private use of company vehicles, a thorough review of the company’s internal fleet policy is necessary. In particular, the following should be examined:

• Contractual terms
• Form of consideration
• Vehicle ownership structure and category

Our experts are at your disposal to secure your operations and optimise the recovery of deductible VAT on your vehicle fleet:

• Audit of your operations
• Eligibility check
• Identification of VAT due and deductible
• Recovery of past VAT credits
• Automation of future processes

Recover your French VAT on company car fleets by contacting our experts: contact@btobnice.com