Opportunity #6: The benefit in kind of vehicles
Every day, a crucial question.
A clear and concrete answer every day.
Excerpt from the book “50 Answers to Our Entrepreneurs”, written by François Cattin, founder of the Group Les Experts Unis.
The book was completely updated and rewritten last September.
A benefit in kind is when a company makes a vehicle available to an employee or company manager for their personal use.
The benefit in kind is characterized by a quantification of this benefit which will be subject to income tax and social security contributions.
On the other hand, the employee or manager can use this vehicle as they wish: holidays, leisure, weekends, errands…for the mileage they want.
Should we avoid benefits in kind?
The benefit in kind depends on whether the vehicle is internal combustion or electric.
Let's take the case of a combustion engine motor vehicle. The company covers the fuel costs.
If the vehicle is less than 5 years old: 15% of the purchase price including VAT per year.
If the vehicle is more than 5 years old: 10% of the purchase price including VAT per year
If the vehicle is rented: 50% of the total cost.
Therefore, we can see that it is better to have a cheaper vehicle that is more than 5 years old.
A new vehicle, purchased for €40,000: benefit in kind: €40,000 x 15% = €6,000
A used vehicle over 5 years old, purchased for €15,000: benefit in kind: €15,000 x 10% = €1,500
Let's take the first case: benefit in kind €6,000 per year, or €500 per month.
If you are self-employed, your social security contributions will increase by approximately €220 per month.
But you will save at least 15% on corporate tax, which is a real cost of €187 per month.
If you are treated as an employee (SAS, SASU): your employer social security contributions will also be around €220, you will also have employee contributions of around €110.
There will be the same savings in corporate income tax, the actual cost to the company will be €187 per month, and €110 in employee contributions.
We do not voluntarily take on the cost of income tax, because in both cases, income and/or salary would be required to pay for the vehicle.
So, for €187 per month for the company and €110 personally (SAS, SASU), is it a bad plan to benefit from an "open bar" vehicle worth €40,000?
Expert advice:
Again, this is a decision that must be made based on many factors:
The purchase price of the vehicle
Son âge
Its fuel
Company vehicle tax
The penalty
The number of kilometers travelled for private or personal purposes.
The final question will be: should you buy the vehicle personally and be compensated for business mileage?