July 19, 2021
Company directors may be tempted to purchase a passenger car in the name of their company for business travel. But this may not be the best financial solution.
To begin with, VAT is not deductible on passenger vehicles except in exceptional cases.
In addition, a depreciation deductibility limit is applied to these vehicles depending on their CO2/km emissions (new limits for vehicles acquired from January 1, 2017 following the 2017 Finance Law).
For an acquisition or rental since January 1, 2017 here is the breakdown of possible deductions:
However, for an acquisition or rental before 2017, the caps have not changed:
In addition, most companies will be liable for the company vehicle tax (CVT ), which can be significant depending on CO2 emissions.
In conclusion, it is sometimes financially better to use a personal vehicle and to be reimbursed for the portion of business trips via mileage allowances than to acquire a company vehicle.
If you have any questions, Blendy by Cogesten certified QuickBooks will help you make the best decisions for your company.
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