An employee who receives the keys to a vehicle provided by their employer does not always grasp the legal and tax implications of this benefit. The company car is subject to specific rules, outlined in the employment contract and governed by labor law. Since February 2025, new URSSAF scales further complicate the calculation of the benefit in kind, with direct consequences on the payslip.
Company Car and Employment Contract: What the Law Really Protects
The company car differs from the service vehicle by one fundamental point: it can be used for personal purposes, in the evening, on weekends, and during vacations. It is not just a professional tool; it is a contractual element.
When the employer mentions this provision in the contract, they can no longer unilaterally withdraw it. The Court of Cassation has repeatedly confirmed that removing a company car is equivalent to modifying the employment contract. The employee can refuse this modification. They can also acknowledge the termination of their contract or take the matter to the labor tribunal.
Are you wondering if the mention of “service vehicle” in your contract changes anything? It is not the term used that matters, but the actual conditions of use. If you take the vehicle home every night and use it freely on weekends, case law reclassifies it as a company car, regardless of what the clause states. To delve deeper into the labor code regarding company cars on Auto Tech, the contractual obligations are detailed by type of situation.
Two URSSAF Scales in the Same Fleet: The 2025 Tax Trap
Since the decree of February 25, 2025, URSSAF applies a dual regime for calculating the benefit in kind for vehicles. The determining criterion is not the purchase date of the vehicle, but the date of provision to the employee.
For vehicles provided before February 1, 2025, the old flat rates remain in effect. For those assigned from that date onward, the rates have been significantly increased.
- Vehicle purchased, provided before February 2025: flat rate based on 9% of the purchase cost (or 6% if the vehicle is over five years old), with an increase if the employer covers the fuel.
- Vehicle purchased, provided from February 2025: the flat rate rises to 15% or 20% of the purchase cost, depending on fuel coverage.
- Leased vehicle, provided from February 2025: the flat rate reaches 50% or 67% of the total annual rental cost, again depending on fuel.
Concrete result: two employees in the same company with the same model of car can have very different benefits in kind on their payslips, simply because one received the vehicle in January and the other in March 2025. HR and payroll services must track each allocation individually.
Electric Company Car: A Reduced Benefit in Kind Until 2027
100% electric vehicles benefit from a derogatory regime that deserves attention. For provisions between February 1, 2025, and December 31, 2027, the flat rate assessment of the benefit in kind is halved compared to thermal vehicles, within an annual cap.
The electricity costs covered by the employer for charging the vehicle at the workplace are excluded from the calculation base during this period.
For an executive or employee who is hesitating between a thermal model and an electric one, the difference in social treatment can represent a significant amount each month. However, this preferential regime is temporary, set to last until 2027.
Fines, Accidents, and Geolocation: Three Areas of Friction Between Employer and Employee
Why do these issues generate so many disputes? Because the company car blurs the line between professional and private life.
Fines are addressed to the holder of the registration certificate, thus to the employer or the lessor. Since Article L121-6 of the Highway Code, the employer must communicate the identity of the driver responsible for the offense. The designated employee pays the fine and suffers point deductions.
In the event of an accident with the company vehicle, liability depends on the context. During a business trip, the accident falls under the regime of work accidents. During personal use, the vehicle’s insurance comes into play, but the employer remains responsible for the maintenance and insurance of the vehicle.
The geolocation of the vehicle is another sensitive point. An employer can equip their fleet with a GPS tracking system, but only for specific purposes (safety, optimization of business trips). Tracking outside of working hours is prohibited. The employee must be able to deactivate geolocation during personal trips.
The company car remains one of the most regulated benefits in French labor law. The 2025 scales add a layer of administrative complexity that neither employers nor employees can ignore, especially in mixed fleets where two calculation regimes now coexist for the same model of vehicle.
