Taxation of benefits in kind: threat to companies and employees

The French government is planning to revise the taxation of company car benefits in kind (AEN) in order to increase tax revenues. This tightening could increase the burden on companies and reduce the purchasing power of employees. What does this reform entail, and how can we anticipate its effects?

In this article, find out everything employees and companies need to know to anticipate these changes and optimize the taxation of company vehicles..

Reform of the Taxation of Benefits in Kind on Company Vehicles: Issues and Impacts

The project under study aims to increase the tax rate on benefits in kind, based on a revision of the rates applied to company cars. Over and above its financial ambitions, the French government believes that the rate of private use of company cars is largely underestimated. This is undoubtedly all the more true since the development of telecommuting.

This reform would affect all types of company vehicle, whether internal combustion or electric. According to initial information, combustion-powered vehicles will be the most affected. In particular, when fuel costs are covered by the company. Electric vehicles, on the other hand, would probably be less affected by this tax reform.

Consequences for Companies and Employees

1. For companies A rise in payroll taxes linked to NEAs could lead companies to review their benefits packages or mobility policies. The overall cost of managing vehicle fleets could increase. This would make it necessary to further optimize expenditure.
2. For employees Company cars are often an integral part of a manager's remuneration package. A "Benefits in Kind Vehicle" line therefore appears on the gross salary of their payslip. Like gross pay, this budget line is subject to social security and employer contributions.
   With higher taxes, the amounts deducted from their pay slips could increase, reducing their purchasing power.

Optimum Automotive's solutions to anticipate and optimize the NEA reform

Optimum Automotive, a specialist in fleet management since 2006, offers several solutions to reduce the costs associated with benefits in kind. Here are two key strategies for companies seeking to optimize their tax situation:

1. Actual return for optimized taxation

To reduce the tax impact of NEAs, actual declaration makes it possible to differentiate between private and business mileage. This makes it possible to adjust taxable amounts according to actual vehicle use. Optimum offers an automated service called "Usages et Fiscalité". It facilitates the monitoring of business and private use, while optimizing tax costs. This is achieved by means of standard templates listing the days and times of the day for professional and private use. These templates can of course be modified to take account of changes or unforeseen events... Thanks to a telematic box, the kilometers driven are then allocated to a "professional" or "private" category.

Optimum's "Usage and Taxation" service provides an accurate snapshot of each employee's usage. A tax simulator can also be used to establish a tax projection to determine the most advantageous method of declaration (actual or flat-rate).

2. Transition to Electric Vehicles

Under environmental and governmental pressure (LOM, ZFE...), car fleets are gradually migrating to electric vehicles. A more economical and environmentally-friendly means of transport. With the prospect of more favorable tax treatment for electric vehicles, the electric migration of company vehicles could accelerate.

Optimum offers an "electrification study" to guide fleet managers along this path. The service is based on an in-depth study of each vehicle's usage over a significant period. This includes: daily mileage, number and duration of stops, and usual parking locations... All these parameters enable us to obtain an accurate snapshot of each vehicle's usage, and to anticipate the various stages of the energy transition. Optimization can be achieved through :

• identifying "electrifiable" vehicles,
• choice of renewal vehicles
• calibration and installation of charging stations
• anticipating the impact on TCO (Total Cost Of Ownership)
• carbon footprint

This study provides fleet managers with a genuine, ready-to-use roadmap.

Preparing for the Future to Reduce Tax Costs

In short, whether or not the reform of company car taxation becomes a reality, there are ways of optimizing the taxation of company cars. Increased taxation on company car NEAs could have a lasting impact on company and employee finances. By adapting now, companies can not only control costs, but also proactively anticipate future tax challenges.