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Taxation of a passenger vehicle in 2022 - Blendy certified digital accountant QuickBooks

Fiscal constraints of a passenger car in 2022

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.

What you need to know

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:

  • For vehicles emitting less than 20g CO2/km (electric vehicles), limit of €30,000.
  • Vehicles emitting between 20g and 60g of CO2/km (hybrid vehicles), the limit is €20,300.
  • For vehicles emitting between 60g and 155g of CO2/km, limit of €18,300 (note that the maximum emission rate will be gradually lowered from 155g to 130g/km from 2017 to 2021).
  • Finally, vehicles emitting more than 155g, limit €9,900 (same reduction from 155g to 130g/km from 2017 to 2021).

However, for an acquisition or rental before 2017, the caps have not changed:

  • For vehicles with a CO2 emission rate less than or equal to 200g/km, depreciation is deductible up to €18,300.
  • For vehicles emitting more than 200g of CO2/km, depreciation is deductible up to €9,900.

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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