Personal car or company car in 2026: which option costs less in France?
- Aug 7
- 5 min read
Should you buy a car personally and have your company reimburse you for business mileage? Or should the company buy or lease the vehicle directly?
In France, in 2026, the answer is not as obvious as it may seem. The purchase price or monthly lease payment is not only part of the equation. Mileage reimbursements, taxable benefits, VAT, depreciation limits, purchase taxes and annual vehicle taxes can significantly change the overall cost.
Key takeaways - France
Personal car + mileage reimbursement: often a simple and cost-effective option when business mileage remains moderate.
Company-owned gas or diesel vehicle: taxable benefits, CO₂-related taxes, pollution taxes and purchase penalties can add up quickly.
Company-owned EV: generally benefits from more favorable tax treatment, particularly when it comes to taxable benefits and annual vehicle taxes.
VAT and depreciation: having the company buy the vehicle does not mean the full cost is tax deductible.
The right comparison is the total cost for both the company and the business owner, not just the vehicle’s monthly payment.
Option 1: Use your personal car and get reimbursed
Let's examine a first scenario. As a manager, you use your personal vehicle for your business trips and the company reimburses those trips based on the French mileage allowance, provided the business purpose and mileage are properly documented.
In these cases, the tax scale already takes into account a large part of the vehicle's costs: depreciation, maintenance, tires, insurance, and fuel. For a 100% electric vehicle, the calculated allowance is increased by 20%.
The advantage is quite obvious. There is no vehicle to buy or rent by the company and, when the reimbursements correspond to genuine, justified professional expenses, they do not constitute additional compensation.
The trade-off is that the business owner personally bears the cost of purchasing the vehicle, insuring it and absorbing its loss in value.
There is one lesser-known point to keep in mind: when a company reimburses significant business mileage on a personally owned vehicle, that vehicle can potentially be taken into account for France’s annual CO₂ and air-pollutant vehicle taxes.
However, if the company reimburses no more than 15,000 business kilometers during the year, no CO₂ or air-pollutant tax is due for that personal vehicle. Above that threshold, an increasing portion of the tax may apply.
Option 2: Have the company buy or lease the car
In this scenario, the company pays for the vehicle, its insurance, its maintenance, and possibly its fuel or charging. This is obviously "convenient" for the manager.
However, if the employee also uses the car for private purposes, this use generally constitutes a taxable benefit in kind for a salaried executive or someone with similar status. And its cost has increased significantly for vehicles made available since February 2025.
For a company-purchased vehicle less than five years old, the flat-rate assessment now reaches 15% of the purchase price per year, or 20% when the company also covers the fuel.
For leased vehicles or vehicles under a lease-to-own agreement, the allowance covers 50% of the annual cost of the lease, maintenance, and insurance, or even 67% with fuel included, depending on the flat-rate method. That benefit is included in the executive’s social contribution base.
Electric vehicles, however, benefit from a much more favorable tax regime. Certain qualifying EVs benefit through the end of 2027 from a 70% reduction in the taxable benefit, capped at €4,582 per year. Electricity paid by the employer for charging is also excluded from the benefit calculation.
VAT: putting the car through the company does not automatically create a tax advantage
For a standard passenger car, the company generally cannot recover the VAT on the purchase price. The same restriction usually applies to lease payments for vehicles that are excluded from VAT recovery, except in certain specific businesses such as vehicle rental or passenger transportation.
The situation is different for fuel. For a passenger car, 80% of the VAT on gasoline, diesel or E85 can genrally be recovered, subject to the usual conditions for VAT recovery.
So if a company buys a car for €50,000 including VAT, it should not assume the real cost automatically drops to roughly €41,667 after VAT recovery.
Depreciation is not fully deductible either
Another common assumption is that if the company buys the car, the entire purchase price can be depreciated for tax purposes.
For passenger vehicles, however, the tax-deductible depreciation amount is capped based on CO₂ emissions. For vehicles acquired since 2021, the ceiling ranges from €30,000 for vehicles emitting less than 20 g of CO₂/km down to €9,900 for vehicles emitting 131 g/km or more.
Any depreciation related to the portion of the purchase price above the applicable ceiling must be added back to taxable income.
A high-end gasoline or diesel vehicle purchased through the company can therefore be far less tax-efficient than its accounting treatment might suggest.
CO₂ taxes, pollution taxes and purchase penalties can make combustion vehicles expensive
In France, companies using passenger vehicles for business purposes may also be liable for two annual taxes: one based on CO₂ emissions and another based on air-pollutant emissions.
Fully electric and hydrogen-powered vehicles are generally exempt from these annual taxes.
Purchase taxes must also be considered. In 2026, France’s CO₂ purchase penalty starts at 108g/km and can reach €80,000 for vehicles emitting more than 191g/km. The weight-based penalty begins at 1,500 kg.
Please note that, as of July 1, 2026 , in France, electric vehicles are no longer all automatically exempt from the weight-based penalty. EVs meeting France’s low-carbon-footprint criteria remain exempt, while other electric vehicles receive a 600 kg allowance before the tax is calculated.
So which option makes the most sense?
For a business owner who drives a low to moderate number of business miles, using a personal vehicle and receiving mileage reimbursement can remain a very efficient solution. It is simple, avoids a taxable benefit and keeps the vehicle off the company’s balance sheet.
When business mileage is high, when the company wants to cover the vehicle financing directly, or when a tax-efficient electric vehicle is being considered, a company car may become more attractive.
By contrast, an expensive gasoline or diesel vehicle with high emissions can quickly accumulate several disadvantages: purchase penalties, annual taxes, taxable benefits, non-recoverable VAT and limited tax depreciation.
The right decision should therefore be made before signing a purchase order or lease agreement.
Blendy can model both scenarios based on the business owner’s status, annual business mileage, the vehicle being considered and the full tax and social contribution impact. A few calculations before the purchase can prevent years of unnecessary extra cost.
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