A brief history of VAT
VAT or Value Added Tax is a consumption tax invented in France in 1954. Before VAT was introduced, businesses were subject to taxes, which they passed on in their selling prices. The problem was that the more intermediaries there were, the higher the price.
With VAT, regardless of the number of intermediaries, the final consumer pays the same tax, i.e. generally 20% of the price excluding VAT of the product.
The purchaser therefore pays VAT to the company from which he buys the product and not to the State.
Each of the companies involved in the production of the product purchased will then pay this tax to the State.
Let's take a concrete example
You buy equipment for €24,000 including VAT. In this case, the VAT is €4,000.
The seller will collect €4,000 in VAT (output VAT).
The seller then deducts the VAT that his suppliers charge him on the purchase of the goods, known as deductible VAT, and pays the difference to the government.
However, the concept of VAT is different for company cars.
Is it possible to reclaim VAT on a company electric car?
In theory, no. VAT is not recoverable on private cars for business use, regardless of the method of purchase (long-term hire, hire with purchase option or cash purchase).
If the employee buys the car on a personal basis for business use and is therefore entitled to mileage allowancesVAT will be payable. The company cannot reclaim VAT.
Exceptions
You can reclaim VAT if you buy commercial or company vehicles, regardless of the method of purchase (long-term hire, hire with purchase option or cash purchase).
- Commercial vehicles (CUVs) or light commercial vehicles (LCVs)
- Commercial vehicles (VI)
- Private vehicles (PS), but only if they are used for driving lessons or passenger transport (taxi, VTC).
- Passenger cars for hire
- 2-seater derivatives of passenger cars (PCs), provided that the registration document specifies the name van (CTTE) or 02 for the number of seats.
VAT can be reclaimed if the car is resold to a second-hand car dealer.
When you sell your vehicle, the sale of an asset that has not given rise to a right to deduct VAT is exempt from VAT (article 261-3-1° of the General Tax Code). The buyer of a company car will therefore not be able to deduct any VAT.
In the specific case of resale to a used vehicle dealerIn some cases, the company can reclaim part of the VAT originally paid.
Note that a dealer can reclaim VAT if the car has always been owned by companies before.
Is it possible to reclaim VAT on a company electric car?
Yes, VAT can be reclaimed on fuel, but at different rates for different types of fuel.
Fuel | Recoverable VAT |
Diesel | 80 % |
LPG (Liquefied Petroleum Gas: a mixture of butane and propane) | 100 % |
CNG | 100 % |
Electricity | 100 % |
In addition to VAT, companies benefit from a advantageous taxation for electric cars.
- No TVS
- Exemption from vehicle registration fees
- Depreciation basis of €30,000
For more information, we've put together a guide to this topic to explore the different aspects in depth:
Read our article about :
Beev offers multi-brand 100% electric vehicles at the best prices, as well as recharging solutions.
