Abolition and replacement of the business Vehicle Tax (VAT)

The VAT has been abolished since 1^er January 2022. It is replaced by 2 taxes on the use of vehicles for economic purposes which will be payable in respect of the previous year.

This change aims to encourage all economic players to use more clean vehicles and to get rid of their most polluting vehicles. In addition, the introduction of these new taxes modernizes the rules for calculating what was the old SST.

Introduction of 2 new taxes replacing VAT

The 2 new annual taxes introduced take over the 2 components of the old SST.

For example, taxes on the economic use of vehicles are:

• the annual carbon dioxide tax (former carbon dioxide tax);
• the annual passenger vehicle age tax (formerly Air Pollutant Emissions Tax).

The rates specific to these two taxes remain identical.

Extension of the scope

These two taxes on the economic use of vehicles have a wider scope than that of VAT, since it includes all economic operators.

Individual companies are therefore now affected by the payment of these fees. However, only a small number of individual companies will be eligible to pay these fees.

Individual companies are exempted if they fall below the de minimis ceilings. This European framework sets a threshold for small amounts of aid not to be exceeded for the same company over three rolling fiscal years (current and previous two fiscal years):

Annual taxes calculated

Taxes on the economic use of vehicles are annual, unlike the VAT which was calculated and reported quarterly.

Taxation period extends from 1^er January to December 31 of each year. These taxes are paid for the use of the vehicle in the previous year.

The calculation of these new taxes shall be carried out in accordance with number of days the vehicle is used in the year whereas the old TVS was based on the number of quarters of use.

Each of these 2 new taxes is calculated as follows: (duration of the assignment of the vehicle in France for economic purposes/number of days of the calendar year) x annual fee.

A reduction subject to compliance with the minimis

Already present under the former VAT, the reduction of € 15 000 on the cumulative amount of taxes is maintained for vehicles owned or rented by employees or managers benefiting from the reimbursement of mileage costs.

However, the benefit of this reduction is now subject to compliance with the de minimis regulations (see table De minimis Thresholds above).

Amendment of the list of vehicles concerned

Although the scope of the vehicles covered by the 2 new taxes is largely the same as that covered by the old VAT, there are some changes to be noted.

Thus, immobilized or impounded vehicles are not deemed to be used for economic purposes and therefore fall outside the scope.

The same shall apply to vehicles marked ‘demonstration vehicle’ or covered by a ‘W garage’ certificate. This type of vehicle must cumulatively be authorized to operate solely for the purposes of its construction, marketing, repair or roadworthiness testing and do not carry out any transport operation for this purpose.

For vehicles of category N1 (vehicles designed and constructed for the carriage of goods with a maximum weight of 3,5 tons or less), multi-purpose vehicles intended for the carriage of passengers and their luggage or goods are no longer covered by these taxes because they are no longer included in the list of passenger vehicles.

Obligation to draw up a recapitulative statement of affected vehicles

Companies must now keep, for each of the charges for which they are liable, an annual summary statement of the charges for the economic use of the vehicles assigned to their activity.

This summary report shall also list the following information for each affected vehicle:

• the technical parameters (power plant, etc.);
• the date of first registration and the date of first registration in France;
• the conditions of the assignment;
• assignment periods.

The purpose of the recapitulative statement is to collect the information which will be necessary for the calculation of taxes on the economic use of vehicles. It must be up to date by the date of the declaration. The tax authorities may have access to them if necessary. This status will be communicated to him at the first request of the administration.

Declaration and payment of fees

As regards the reporting formalities and the payment of the annual CO₂ emissions levy and the annual vehicle age levy, these depend on the company’s VAT system:

• the taxable persons subject to the normal effective arrangements for taxation or the non-taxable persons for VAT purposes must declare the taxes on Form No. 3310 A, annex to the VAT return. This annex is to be filed in January following the tax period;
• the taxable persons covered by the simplified VAT system must declare the taxes on the form no. 3517 which must be filed in respect of the financial year in which the tax became chargeable. This form must therefore be submitted within 3 months of the end of the financial year if it does not end on 31 December or the May 3 in other cases.

It should be added that if the amount of one of the taxes is zero, the absence of a declaration will be equivalent to the recognition of that tax.