The Labor Code does not contain any specific provisions regarding company cars. The entire regime relies on jurisprudence, contract law, and social security texts related to benefits in kind. This lack of a dedicated legislative framework creates gray areas that the internal car policy and contractual clauses must fill.
Revaluation of the vehicle benefit in kind since February 2025
The flat-rate scale for the benefit in kind has been significantly tightened for vehicles assigned from February 1, 2025. For a purchased vehicle, the flat rate rises to 15% of the purchase price compared to 9% previously. For a leased vehicle, it now amounts to 50% of the annual cost, up from 30% before.
In practical terms, the base for employer and employee social contributions is increasing, as is the taxable income base for the beneficiary. Companies that still apply the old scales to allocations made after this date risk an URSSAF adjustment during an audit.
We recommend systematically checking the date of vehicle assignment (and not the registration date) to determine the applicable scale. This date is what matters to the administration. The rules of the labor code for company cars actually fall more under social and tax law than solely the Labor Code, making regulatory compliance all the more technical.
Electric company vehicle: deduction conditioned on the eco-score
The electric nature of the vehicle is no longer sufficient to trigger the advantageous social regime. For allocations between February 1, 2025, and December 31, 2027, a 70% deduction on the benefit in kind is possible, but only if the exact version of the model meets the required environmental score.
The electricity costs covered by the employer are also excluded from the contribution base, provided that the vehicle is eligible. This detail is important: two versions of the same model can have different eco-scores depending on their assembly location or the origin of the batteries.
Meanwhile, the ecological bonus for companies has been eliminated since December 2, 2024. It is therefore no longer possible to combine purchase aid and social benefit. The tax lever remains the only financial argument for electrifying a fleet, which necessitates checking eligibility model by model before any order.
Contractual clauses for the company vehicle: what the contract must cover
The provision of a company vehicle constitutes an element of the employment contract as long as it is explicitly stated. Its unilateral removal by the employer equates to a modification of the contract, requiring the employee’s agreement. The Court of Cassation has confirmed this principle several times.
The employment contract or a dedicated amendment must provide at least:
- The characteristics of the vehicle (category, engine type, range ceiling), as well as the replacement conditions in case of fleet renewal.
- The rules for personal use, specifying whether the vehicle can be used during vacations, weekends, and by household members of the employee.
- The distribution of costs: fuel or charging, routine maintenance, insurance, tolls, and especially the regime applicable to fines (the holder of the registration certificate remains legally liable, but a clause can organize reimbursement).
- The location for returning the vehicle and the return deadline in case of contract termination, suspension (long-term illness, sabbatical leave), or layoff.
The absence of a clause on return during a suspension period is the main source of disputes. Jurisprudence distinguishes between suspensions that maintain the benefit (maternity leave, for example) and those that may justify a temporary withdrawal, such as a long-term sick leave, provided that the car policy expressly provides for it.
Tax on company vehicles and fleet strategy in 2026
The CO2 component of the tax on company vehicles increases each year according to a progressive scale. In 2026, the exemption threshold for low-emission vehicles remains a structuring parameter in fleet choice.
Vehicles running exclusively on electricity are exempt from this tax. For plug-in hybrids, the exemption depends on the CO2 emission rate and may only be temporary. The total cost of owning a thermal company vehicle now includes the annual tax, which alters the trade-off between engine types.
We observe that several companies are now incorporating the projection of the tax over three to five years into their allocation grid. This prospective calculation allows for an objective comparison of the cost of a high-end thermal vehicle with that of an equivalent electric vehicle, including benefits in kind and taxation.
Notice period and return of the company vehicle
During the notice period, the employee retains the use of the company vehicle since the employment contract is still in execution. Withdrawing the vehicle during the notice period constitutes a unilateral modification of the contract.
In the event of a waiver of notice initiated by the employer, the employee retains all benefits related to the contract, including the vehicle. However, if the waiver is requested by the employee and accepted by the employer, the return may be required immediately, provided that this condition is included in the contractual clause.
The effective return date must be formalized in writing, along with a condition report of the vehicle. Disputes frequently arise over unreported damages or mileage exceeding a contractual ceiling. A contradictory report signed by both parties remains the best protection against these disputes.
