In France, more and more companies are choosing to electrify their car fleet and provide electric cars to their employees. Good news: the calculation of this benefit in kind benefits from a specific regime. Overview.
Benefit in kind: electric car: how does it work?
One benefit in kind is a good or service offered to an employee by the company. This may involve offering meals in a canteen or providing accommodation, a telephone or a company vehicle. Whatever the nature of this benefit, expenses incurred by the employer are subject to social security contributions.
Companies that have made the choice to green their fleet can provide their employees with an electric vehicle or a charging station. To encourage the development of electric mobility in France, the calculation of this benefit in kind benefits from a preferential rule.
However, be careful: this advantage applies to executive electric vehicles, and not to service vehicles. The difference? If the company vehicle can be used for professional and personal purposes (on weekends for example), the service vehicle can only be used for business trips.
Commercial electric car: how to calculate this benefit in kind?
For the provision of a 100% electric car, the amount of costs selected to calculate the benefit in kind is subject to a 50% reduction capped at €1,800 per year. The electricity costs incurred by the company to charge the vehicle are not taken into account*.
To calculate the benefit in kind resulting from the provision of an electric vehicle, the employer has the choice between two methods: actual expenses and the annual package. Explanations.
Calculation of the benefit in kind based on the costs actually incurred
This calculation is carried out differently depending on whether the electric car was purchased or rented.
- In case of purchase
The following elements should be taken into account:
— maintenance costs including VAT;
— vehicle insurance;
— depreciation of the vehicle over 5 years at the rate of 20% per year.
Attention: the benefit in kind is calculated in proportion to the time the car is used privately. To determine this percentage, simply calculate how much the distance driven for personal use represents in the total number of kilometers driven by the car.
- In case of rental
The following are taken into account in the calculation:
— maintenance costs including VAT;
— vehicle insurance;
— the overall cost of the rental including VAT.
Again, you have to multiply these elements by the percentage of the mileage covered by the employee for personal purposes.
Here is an example of the calculation:
— Renting an electric car costs the employer €5,000 per year.
— The insurance is €1,000 and the maintenance costs €300.
— The total cost is €6,300.
— The proportion of personal use is 20%. The calculation is therefore as follows: €6,300 x 20% = €1,260.
— The 50% discount is then applied: €1,260 x 50% = €630.
The value of the benefit in kind for the electric vehicle is €630.
Calculation of the benefit in kind based on the package
The evaluation of The in-kind advantage for an electric car on a flat rate basis is as follows:
- In case of purchase
The benefit in kind is equal to 9% of the purchase cost including VAT if the vehicle is less than 5 years old, or 6% if it is more than 5 years old. - In case of rental (with or without an option to buy)
The package applied is 30% of the total annual cost including VAT. It includes rental, maintenance, and insurance.
Here is a new calculation example:
— The rental of an electric car costing the employer €5,000 per year.
— The insurance is €1,000 and the maintenance costs €300.
— The total cost is €6,300.
— Application of the 30% package: €6,300 x 30% = €1,890.
— The 50% discount is then applied: €1,890 x 50% = €945.
The value of the benefit in kind for the electric vehicle is €945.
Good to know
The preferential rules for calculating the benefit in kind have been extended until 31 December 2024.
*the conditions are detailed in the revised version of the order on the assessment of benefits in kind
Businesses: why make electric cars available?
Providing an executive electric car as a benefit in kind to employees is a great way for businesses to:
- Boost their employer brand
An electric fleet is an attractive window for the company and a real recruitment lever. In the key? Attracting talent that favors companies committed to an environmental approach.
- Retain their employees
With an electric car, employees have the opportunity to reduce their environmental footprint while enjoying surprising comfort (performance, quiet driving, automatic transmission, etc.). For employees who have to make regular business trips, this advantage in kind is not negligible. And who says more pleasant driving also means less stress and risks on a daily basis.
- Reducing their burdens
The transition to a company electric fleet makes it possible to reduce the amount of several costs such as fuel (electric charging being cheaper) or maintenance costs over the long term. The company can also benefit from tax advantages granted by the State, such as exemption from tax on passenger vehicles used for economic purposes.
Did you know that?
In addition to these advantages, businesses benefit from subsidies for the purchase of electric vehicles. Most have been extended until 2023: now is the time to take advantage of them!
Also to read: Assistance for the purchase of an electric vehicle in 2023
Sources: URSSAF.
