General

The tax is payable when a vehicle is used for economic purposes in a territory subject to taxation.

A vehicle shall be used for economic purposes in the taxation territory where it is:

• Authorized to circulate in the territory of taxation
• And linked to the economic activity of a company.

Taxation Territories

The territories to which the taxes on the use of vehicles for economic purposes are:

• Metropolitan France
• Guadeloupe
• Martinique
• Guiana
• Reunion
• Mayotte.

1st condition: authorization of the vehicle to travel in the territory of taxation

All vehicles which are authorized to use the roads are considered to be authorized to travel within the territory of taxation. This applies to:

• Whether or not the vehicles are registered in France
• And whether the authorization is temporary or permanent.

Thus, the following vehicles are not taxable:

• Carte grise Falling within a category or subcategory exempted from the requirement to hold a registration certificate (VRC), even when their use on the road is permitted under certain conditions
• Who do not have a valid certificate of registration or whose validity of the certificate of registration is suspended.
• Held by a used vehicle center and covered by a certificate of destruction
• Damaged and prohibited to traffic. However, at the end of the procedure, the condition of taxation is again fulfilled, at the moment when the authorization to move is restored.

By way of exception, the following vehicles are not taxable, even if they are formally authorized to travel:

• Vehicles which cannot be physically used because they have been immobilized or impounded at the request of the public authorities. Vehicles which are immobilized, impounded or made unavailable at the request of persons other than public authorities are, however, taxable.
• Authorized to circulate for the sole purpose of their construction, marketing, repair or technical inspection. This exception only applies to vehicles with a provisional registration certificate ‘WW’ or ‘W garage’ or with the use indication ‘demonstration vehicle’. It shall apply only on condition that they do not actually carry out any transport operation other than that strictly necessary for the performance of those activities.

2nd condition: attachment to an economic activity in France

General

A vehicle is considered to be connected with the economic activity of a company if it fulfills one of the following three alternative conditions:

• Be owned by a company and registered in France
• Be covered by a company and be used in France
• Travel in France for the economic activity of a company.

Any company who owns a vehicle (case 1), pays the associated professional costs (case 2) or benefits from the use of the vehicle for the purposes of his economic activity (case 3) is subject to the tax obligations (declaration, payment, etc.) linked to the taxes on the use of the vehicles for economic purposes for the vehicles authorized to circulate in the taxation territory.

Case 1: Vehicle owned by a company and registered in France

Any vehicle registered in France which is owned by a company is considered to be connected with an economic activity and thus fulfills the second condition for taxation.

A vehicle shall be considered to be owned by a company where that person:

• Owner, provided that the vehicle has not been made available to another person under a long-term rental arrangement
• Either does not own it but disposes of it in a long-term rental arrangement, without in turn making it available to a third party in a long-term rental arrangement (such as a sublease). A long-term rental arrangement is a contract under which a vehicle is available to a company for a lease of at least 2 years or for a credit transaction such as a lease with an option to purchase or a lease.

The criterion shall be considered to have been met throughout the period of detention, regardless of the actual use of the vehicle.

2nd case: vehicle covered by professional expenses paid by a company and used in France

Any vehicle for which the following cumulative conditions are met shall also be considered to be connected with an economic activity and also fulfills the second condition of taxation:

• A company shall pay, in whole or in part, the costs incurred for the acquisition, hire, use or maintenance of that vehicle, irrespective of the conditions of that compensation (reimbursement of mileage allowances on the basis of actual costs or mileage scales published by the administration or by means of flat-rate allowances). Taxation shall apply for the entire period during which the costs may be contractually borne, irrespective of the actual use of the vehicle.
• The vehicle is used, in the territory of taxation, by one or more natural persons who work for a company (employees, managers or the like), whether or not the vehicle belongs to him, in the context of business trips.

3rd case: vehicle traveling on the roads of the territory of taxation for the purposes of the economic activity of a company

Any vehicle which circulates in France for the purpose of carrying out an economic activity of a company shall also be considered to be connected with an economic activity.

This possibility applies in particular to vehicles in one of the following situations:

• Which are not registered in France but which are used in France by companies, whether or not established in France, only during the period when they are physically in France.
• Not owned by companies but which a company would have, only for the period of use by a company. This situation may apply, for example, in the case of supply free of charge by a person not subject to VAT.

Vehicles concerned

The 2 taxes relate to the following vehicles:

• Registered in the category M1, i.e. passenger cars (with the mention VP carte grise registered on the certificate of registration). They are designed to carry people and have no more than 8 seats.
• Registered in the category N1 , i.e. vehicles of less than 3.5 tons which can carry both small goods and persons.
  2 types of vehicles are concerned:
  
  • Pickup. The vehicle shall have at least 3 rows of seating positions. Carte grise The following is marked van or code BB in box J2.
  • Pickup truck with a minimum of 5 seats. Carte grise The bodywork description code according to the European classification is BE, entered in box J2 of the certificate of registration.

Exempt vehicles

Vehicles assigned to sole proprietorship are exempt of annual CO fees₂ and pollutants.

This is also the case for vehicles belonging to non-profit organizations and other bodies of general interest which, moreover, benefit from exemptions from value added tax (VAT).

Vehicles used for certain activities shall also be exempt from such taxes:

• Public passenger transport: taxi, chauffeur-driven transport cars and other passenger vehicles used for the carriage of passengers
• Agricultural or forestry activities
• Driving or flight instruction
• Sports competitions.

In the case of mixed use, the tax rate is reduced in proportion to the duration of the use for exempted uses (e.g. if the vehicle is used) 60% from the year to exempt uses, the tax payable rate will also be reduced by 60%).

The vehicles are also exempt from the annual CO₂ and pollutants:

• Accessible by wheelchair or with special facilities for driving by a disabled person.
• The energy source is exclusively hydrogen, electricity or a combination of the two.
• Assigned to the lease. The exemption applies only to the lessor.
• Temporarily made available to a customer, replacing a stationary vehicle (e.g. garage vehicles or roadworthiness centers made available to their customers during the period for which the vehicle is subject to repairs or roadworthiness tests). The exemption applies only to the owner of the vehicle making it available.

Vehicles rented for a very short period are also exempt from these taxes. These are vehicles which, in a calendar year, are hired for a period not exceeding one calendar month or 30 consecutive days.

General rule

The annual amount of taxes on the use of vehicles for economic purposes is equal, for each such tax and vehicle, to the product of the following factors:

• Annual proportion of vehicle allocation to the economic activity of the company
• Annual tariff applicable to the vehicle in relation to its technical characteristics and uses.

The amount resulting from this operation must be rounded to the nearest euro, with the euro fraction equal to 0,5 to be counted as 1.

Annual allocation proportion

The annual proportion of assignment is the number of days in the year in which the taxable vehicle is assigned for economic purposes.

It is calculated according to the following formula: Number of days during which the vehicle is taxable is used for economic purposes or period of employment (‘taxation period’) / Total number of days in the calendar year (365 or 366 for leap years).

The proportion shall be calculated separately for each vehicle and each company liable.

One weighting coefficient shall be applied to the annual proportion of allocation for vehicles taxable on account of their use in France and the assumption of professional expenses associated with such use by a company.

Applicable Annual Rates

For each vehicle, the annual CO2 tax rate must be calculated₂ and the one on air pollutant emissions.

The applicable tariff depends on the characteristics of the vehicle and, in certain situations, on the use to which it is assigned.

Fares, normal or reduced, are applied to a vehicle based on its intended use, regardless of its actual use.

Thus, the vehicle fulfills this condition of assignment not only on the days during which it is actually traveling for this purpose, but also on those days during which it is not traveling but may be considered as being assigned to this purpose. This applies in particular to days when the vehicle is not used, taking into account rest and holidays or, more generally, constraints linked to the management of the stock of vehicles or to the conditions for carrying on economic activity.

A vehicle which, during the taxation period, is used for only one use is therefore considered to be used for that use during the whole period regardless of the number of days during which it is actually used.

Tariffs of the annual CO2 tax

The annual rate of the annual CO tax₂ results, for each vehicle, from the application of a scale which, depending on the situation, is a function of:

• The level of CO₂
• Or the fiscal power of the vehicle.

The scale to be applied is as follows:

• CO Schedule₂-WLTP if CO emissions₂ of the vehicle were taken into account during the 1^re registration in France using the ‘WLTP’ method
• CO Schedule₂-NEDC if CO₂ of the vehicle were taken into account during the 1^re registration in France using the so-called ‘NEDC’ method
• PA scale (administrative power) where the vehicle has not been granted a European type-approval or where the vehicle was already registered and assigned to an economic activity by the company of destination before 1^er January 2006.

The 3 scales are incremental scales in increments for which a reinforcement is planned every year until 2027.

CO scale₂-WLTP

Calculation of the tariff according to the CO scale₂-WLTP is based on CO₂ emissions in fractions, expressed in grams per kilometer (g/km) multiplied by a so-called “marginal” tariff according to a slice scale.

CO scale₂-NEDC

Calculation of the tariff according to the CO scale₂-NEDC is based on CO₂ emissions (in grams per kilometer) multiplied by a so-called “marginal” tariff and according to a slice scale.

PA scale

This method of calculation applies to other vehicles, those not included in the WLTP or NEDC device.

The calculation according to the PA scale is made according to the fiscal power or administrative power (fiscal horses or administrative horses) by fractions of administrative power according to a scale in tranches.

Annual Air Pollutant Emission Tax Tariffs

The annual tax rate on air pollutant emissions depends on the vehicle's membership in one of the following 3 categories:

• Category E, which includes vehicles whose energy source is exclusively electricity, hydrogen or a combination of the two
• Category 1, which includes petrol, hybrid and gas vehicles compatible with the European emission standards known as "Euro 5" and "Euro 6"
• Category ‘most polluting vehicles’, which includes all other vehicles.

These categories correspond to those of the Crit'Air vignettes, the category ‘most polluting vehicles’ corresponding to vignettes 2 to 5.

The annual rate per vehicle according to the category to which it belongs is set out in the following table:

Rebate for vehicles for which the professional expenses are to be met

Companies supporting professional expenses engaged by a natural person (e.g. employee, manager, etc.) for the use or acquisition of vehicles which do not belong to the company benefit from a €15,000 annual taxes on passenger vehicles.

This reduction applies to the cumulative amount of the 2 annual taxes, CO₂ and pollutants, due to all the vehicles for which the company pays the professional expenses, but only to those vehicles (a surplus is not possible).

This reduction shall apply to the amount calculated after application of all the other calculation rules, in particular the weighting and exemptions.