Through an update of the BOFiP dated 30 April 2025 (BOI-RES-TVA-000161), the French tax authorities clarify the VAT treatment applicable to the supply of vehicles to employees.
These comments have been released following the “QM” judgment rendered by the Court of Justice of the European Union (CJEU) on 20 January 2021 (Case C-288/19), which confirmed that such supply may constitute a supply of services for consideration, where an identifiable consideration is provided in return.
The ruling confirms that when an employee is granted use of a vehicle for private purposes in exchange for an explicit or implicit consideration (such as a deduction from gross or net salary, waiver of a benefit or part of remuneration, or a point-based system convertible into advantages), the transaction is subject to VAT. This classification applies regardless of the form of the consideration, provided that there is a direct link between the service provided and the remuneration received.
This entails the following VAT implications:
Where the employee provides no identifiable consideration, the provision of the vehicle does not, in principle, constitute a supply of services for consideration subject to VAT.
However, if the company has deducted VAT on the purchase of the vehicle, the private use by the employee may be regarded as a self-supply subject to VAT under Article 257, II-2 of the French Tax Code.
The ruling also addresses the case of shuttles organised by companies to transport employees between their homes and the workplace.
In principle, such services are considered to meet private needs and therefore do not give rise to a right to recover VAT.
Nevertheless, in accordance with EU case law (CJEU, 16 October 1997, Case C-258/95, Fillibeck), an exception may apply where the use of the vehicle meets the specific needs of the company’s business operations (e.g. isolated or multi-site locations). In such cases, the provision of the vehicle may be justified by business needs and, subject in particular to the vehicle having more than eight seats, the VAT incurred on the related expenses may be recovered.
These clarifications from the French tax authorities, now aligned with EU case law, require companies to: