VAT on company vehicles: Is the right to deduct finally open or a mirage?

The fiscal management of car fleets is undergoing a major upheaval. A rescript published by the tax authorities in April 2025 changed the rules of the game by opening the door to the deduction of VAT on company vehicles, a possibility historically excluded by the General Tax Code.

This new doctrine, which follows a decision by the Court of Justice of the European Union, could represent a considerable financial opportunity for many companies.

A conditioned opportunity

The principle is as follows: if the provision of the vehicle to the employee is accompanied by a direct and identifiable financial “consideration” (such as a payroll deduction or a waiver of part of the remuneration), the transaction is now considered to be a rental.

As a result, the company can deduct 100% of the VAT on the purchase price or the rentals of the vehicle, as well as on the related expenses. In return, it must collect VAT on the fee paid by the employee. The effect is all the more powerful as it is retroactive, giving rise to claims over past years.

The bottleneck: What about the benefit in kind?

While the opportunity is real, its application is complex and a major uncertainty remains: the treatment of the benefit in kind. Does the simple registration of this benefit on the pay slip, the most common practice, constitute a sufficient “consideration” in the eyes of the French administration?

A parliamentary question was asked in June 2025 to clarify this crucial point, but the answer is still pending.

Why you need to audit your situation now

In this transition period, wait-and-see is a risky strategy. If your current practices are affected by the rescript, you could be in a situation of non-collection of VAT. On the other hand, you could miss out on significant savings.

To transform this regulatory shift into a sustainable advantage, a proactive analysis of your employment contracts, payslips and fleet policy is essential.

To see more clearly and understand all the impacts (retroactivity, calculation of the gain, risks) and the actions to be implemented, find our complete decryption of this summary in GPO Magazine: Link

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