Car usage in the French payroll

 Company cars

Company car: Benefit in kind

Companies can provide their employees with company cars.

If an employee uses a company for personal purposes, this usage is considered as benefit in kind. That means that part of the value of the car is subject to social contributions and income tax.

There are 2 methods to compute the value of a benefit in kind.

Fix value

The car benefit in kind value can be a fix value based on the cost of the car (owned or leased).

Owned car

When the company own the car it provides to its employees, the benefit in kind is of 9% of the purchase cost, all tax included (6% if the car over 5 years when it is bought).

If the employer pays the fuel for the personal usage of the car the benefit in kind is then of 12% of the purchase cost, all tax included (9% if the car over 5 years when it is bought).

Leased car

If the company lease the car used by the employee for personal purposes, the benefit in kind is of 30% of the global cost of the lease, all tax included. This global cost includes the lease, the maintenance and the insurance.

If the employer pays the fuel for personal usage of the cart the benefit in kin is then of 40% of the global cost of the lease, all tax included.


FPExpert advice

The benefit in kind is a yearly value. However, it is added monthly to the payroll. It is very common that the monthly value be an estimate of the benefit in kind. And that in December the value of the benefit in kind includes the yearly adjustment.

The best way to compute the global cost of a leased car is to sum the cost registered in the accounting book.


 

Real value

The real value of the benefit in kind is based on the number of kilometres done on personal purposes. The formula is the following:

If the car is owned by the company, the car value is accounting depression of the car over 5 years (10 years for car over 5 years) plus the insurance and maintenance cost.

If the car is leased the value of the car is the cost of the lease plus the insurance and the maintenance cost.


FPExpert advice

The real value is only usable id the employees take note of the number of kilometre done for personal or professional usage.

It also requires that a meter reading be done on a yearly basis.


 

Employee car: the car allowance

There is no legal obligation for a company to provide a company car to an employee.

However, the company may wish that an employee uses a car for his job. In this case the company can give to its employee a “car allowance” so that the employee can purchase and use a car.

The “car allowance” is not a regulated item of the payroll. It is considered as a bonus a fully taxable.

It is very common in small companies who may not have the resources to manage a company car.

The car allowance is very often used by foreign companies without a fix establishment in France because French lease companies rarely provide services to this type of companies.

Employee car: the mileage indemnity

When an employee uses his personal car for professional purposes, the employer can reimburse a mileage indemnity for the cost, the insurance and the maintenance of the car.

This indemnity is exempted from social contribution up to a specific limit.

Professional mileage
Fiscal powerUp to 5 000 kmFrom 5 001 to 20 000 kmOver 20 000 km
3 CV and lessd x 0,41(d x 0,245) + 824 d x 0,286
4 CVd x 0,493(d x 0,277) + 1 082 d x 0,332
5 CVd x 0,543(d x 0,3053) + 1 188 d x 0,364
6 CVd x 0,568(d x 0,32) + 1 244 d x 0,382
7 CV and mored x 0,595(d x 0,337) + 1 288d x 0,401
 d is the distance in kilometer of the professional use of a personal car.

FPExpert advice

The employee must provide to the employer a roadmap of all the travel done with his personal car for professional purposes.

Usually, web site such as http://fr.mappy.com provides printable roadmap for this use.


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