General

The tax is payable if a vehicle is used for economic purposes in a territory covered by the tax.

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

• Authorized to move within the territory of taxation
• And linked to the economic activity of a company.

Taxation Territories

The territories to which the taxes on the economic use of vehicles are as follows:

• Metropolitan France
• Guadeloupe
• Martinique
• French Guiana
• The Meeting
• Mayotte.

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

All vehicles authorized to use road lanes 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 that authorization is temporary or permanent.

Thus, the following vehicles are not taxable:

• Falling within a category or sub-category exempted from the requirement to hold a registration certificate ({circumflex over (X)}), even when their movement on the road is permitted under certain conditions
• Who do not have a valid certificate of registration or whose certificate of registration is suspended.
• Owned by a used vehicle center and covered by a certificate of destruction
• Damaged and forbidden to traffic. However, the condition of taxation becomes fulfilled again at the end of the procedure, at the time when the driving license is reinstated.

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

• Vehicles that cannot be physically used because they have been immobilized or impounded at the request of the public authorities. Vehicles immobilized, impounded or made unavailable at the request of persons other than public authorities are, however, taxable.
• Authorized to circulate solely for the purposes of their construction, marketing, repair or technical inspection. This exception applies only 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 operations other than those strictly necessary for carrying out those activities.

2nd condition: attachment to an economic activity in France

General

Any vehicle is considered to be connected to the economic activity of a company if it meets one of the following 3 alternative conditions:

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

Any company that owns a car (case 1), pays the associated business expenses (case 2) or benefits from the use of the car for the purposes of its economic activity (case 3) is subject to tax obligations (declaration, payment, etc.) linked to taxes on the use of cars for economic purposes for cars permitted to circulate in the territory of taxation.

1st case: Vehicle owned by a company and registered in France

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

A vehicle shall be considered to be held by a company where it:

• Either owns it, 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 as part of a long-term rental formula, without in turn making it available to a third party as part of a long-term rental formula (such as a sublease). A long-term lease is a contract under which a car is available to a company in the context of a lease for a period of at least 2 years or in the context of a credit transaction such as a lease with an option to purchase or a lease.

The criterion is considered to be fulfilled throughout the detention period, irrespective of the actual use of the vehicle.

2nd case: vehicle covered by a company for business expenses and used in France

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

• A company shall bear, in whole or in part, the costs incurred in acquiring, renting, using or maintaining the vehicle, irrespective of the conditions of such compensation (reimbursement of mileage allowances according to actual costs or the mileage scale published by the administration or by means of lump-sum allowances). Taxation shall apply for the entire period during which the costs are contractually liable to be borne, irrespective of the actual circulation of the vehicle.
• The car is used, in the territory of taxation, by one or more natural persons who work for a company (employees, managers or similar), whether or not the car belongs to it, in the context of business travel.

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

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

This possibility shall apply 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 for the period during which they are physically in France.
• Not owned by companies but available to a company, only during the period of use by a company. This situation may apply, for example, in the context of a supply free of charge by a person not subject to VAT.

Vehicles concerned

The 2 taxes concern the following vehicles:

• Registered in the category M1, i.e. the passenger cars (with the VP listed on the, now called certificate of registration). They are intended to transport people and have no more than 8 seats. However, special purpose vehicles not wheelchair accessible and vehicles which are reversibly adapted for commercial use are not subject to taxes.
• Registered in the category N1 , i.e. vehicles of less than 3.5 tons which can carry both small goods and people.
  2 types of vehicles are concerned:
  
  • Pickup. The vehicle must have at least 3 rows of seating. The {circumflex over (C)} is marked pickup or the code BB in box J2.
  • Pickup truck with a minimum of 5 seats. The body description code according to the European classification shall be entered in box J2 of the certificate of registration ({circumflex over (X)})
  • Truck classified off-road (all terrain) with at least 5 seats.

Exempt vehicles

Vehicles assigned to sole proprietorship are exempt of annual fees CO₂ and pollutants.

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

Vehicles used for certain activities the following are also exempted from these taxes:

• Public transport of persons: taxis, transport cars with driver and other passenger vehicles used for the transport of persons
• Agricultural or forestry activities
• Driving or Piloting Education
• Sports competitions.

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

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

• Wheelchair accessible or with specific amenities for driving by a disabled person.
• Whose energy source is exclusively hydrogen, electricity or a combination of the 2.
• Assigned to rent. The exemption applies only to the lessor.
• Temporarily placed at the disposal of a customer, replacing a stationary vehicle (e.g. garage vehicles or roadworthiness testing centers made available to their customers for the period for which the vehicle is undergoing repairs or roadworthiness testing). The exemption applies only to the owner of the vehicle who makes it available.

Vehicles rented for a very short period of time are also exempt from these taxes. These are vehicles that are leased in a calendar year for a period not exceeding one calendar month or 30 consecutive days.

General rule

The annual amount of taxes on the economic use of vehicles shall be equal to the product of the following factors for each of those taxes and vehicles:

• Annual proportion of vehicle allocated to the company's economic activity
• Annual rate applicable to the vehicle with regard 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 Proportion of Assignment

The annual allocation proportion corresponds to the number of days in the year during which the taxable vehicle is allocated for economic purposes.

It is calculated using the following formula: Number of days on which the taxable vehicle is earmarked for economic purposes or duration of assignment (“taxation period”) / Total number of days in the calendar year (365 or 366 for leap years).

The calculation of the proportion shall be carried out separately for each vehicle and for each company liable.

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

Annual rates applicable

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

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

Rates, whether normal or reduced, are applied to a vehicle based on its use for a given purpose, regardless of its actual use.

Thus, the vehicle fulfills this condition of use not only on the days on which it actually travels for that use, but also on those days on which it does not travel but may be considered to be used for that purpose. This is particularly the case on days when the vehicle is not used, taking into account rest and holidays or, more generally, constraints linked to the management of the vehicle stock or to the conditions for the exercise of economic activity.

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

Annual CO2 Emission Tax Tariffs

The annual rate of the annual tax CO₂ results, for each vehicle, from the application of a scale which, depending on the situation, depends on:

• Either the level of CO emissions₂
• Either of the fiscal power of the vehicle.

The scale to be applied is as follows:

• CO Scale₂-WLTP if CO emissions₂ of the vehicle were taken into account during the 1^re registration in France using the so-called “WLTP” method
• CO Scale₂-NEDC if CO emissions₂ 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 the subject of a European type-approval or where the vehicle was already registered and assigned to an economic activity by the affected company before 1^er January 2006.

The 3 scales are incremental scales for which an increase is planned each year until 2027.

CO Scale₂-WLTP

Calculation of the tariff according to the CO scale₂-WLTP is done according to CO₂ emissions in fractions, expressed in grams per kilometer (g/km) multiplied by a so-called ‘marginal’ tariff according to a scale in increments.

CO Scale₂-NEDC

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

PA scale

This calculation method applies to other vehicles, those which do not enter either the WLTP device or the NEDC device.

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

Annual Air Pollutant Emission Tax Tariffs

The rate of the annual air pollutant emission tax depends on whether the vehicle belongs to one of the following 3 categories:

• Category E, which includes vehicles whose energy source is exclusively electricity, hydrogen or a combination of the 2
• 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 Crit'Air thumbnails, the category ‘most polluting vehicles’ corresponding to vignettes 2 to 5.

The annual price per vehicle according to the category to which it belongs is specified in the following table:

Minus for vehicles that incur business expenses

Companies that support business expenses hired by a natural person (e.g. employee, manager, etc.), for the use or acquisition of non-company owned vehicles benefit from a reduction of €15,000 annual taxes on passenger vehicles.

This reduction applies to the cumulative amount of the 2 annual fees, CO₂ and pollutants, due to all the vehicles for which the company covers the cost of work, but only to those vehicles (a surplus is not possible).

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