Company car
Employer-provided vehicle with authorised private use: a component of pay creating a benefit in kind, unlike a service vehicle.
Definition
A company car (véhicule de fonction) is a vehicle placed at the permanent disposal of an employee by their employer, with permission to use it privately: personal trips, weekends, holidays. That freedom of use makes it a component of pay: the private share constitutes a benefit in kind subject to social contributions and income tax.
In detail
The key distinction is with the service vehicle. The service vehicle is a work tool: reserved for business trips, it is in principle returned outside working hours and generates no benefit in kind, subject to a possible regulated tolerance for home-to-work commutes. The company car, by contrast, accompanies the employee in their personal life. It is this private use that triggers the benefit in kind, valued at a flat rate or on actual costs under URSSAF rules (France’s social-contribution collection body).
Because it is a component of pay, the company car is generally written into the employment contract or an amendment. The employer therefore cannot withdraw it unilaterally without the employee’s agreement: removing it amounts to a modification of the employment contract, barring a negotiated compensation.
On the management side, the company car structures the car policy: which models are authorised per job level, which powertrain is chosen (a central arbitration in the fleet transition between hybrids and electric vehicles) and associated services such as the fuel card or charging. Dedicated platforms, compared in our overview of fleet managers, industrialise its monitoring.
Finally, the company car is no longer the only standard: some companies offer a mobility credit as an alternative, a budget letting the employee give up the vehicle (or choose a smaller one) in favour of other modes of transport.
Frequently asked questions
What is the difference between a company car and a service vehicle?
The company car can be used privately and constitutes a benefit in kind subject to contributions. It is part of the employee's pay. The service vehicle is reserved for business activity and returned outside working hours: with no private use, it generates no benefit in kind, provided the ban on personal use is formalised.
Can the employer take back a company car?
Not unilaterally. As a component of pay, generally contractualised, its removal constitutes a modification of the employment contract that requires the employee's agreement. In practice, withdrawal comes with a negotiated compensation, a pay rise or a mobility credit, formalised in a contract amendment.
Related terms
- Company-car benefit in kind, the social and tax valuation of private use
- Mobility credit, the mobility-budget alternative to an assigned vehicle
- Fuel card, the payment method that comes with the assigned vehicle
