A company car driven by an employee who lives in France can make the VAT due there rather than in the employer’s home country. Many foreign companies have treated it as a benefit in kind and nothing more. Since a German ministry instruction of 3 March 2026, the question looks different.
A hiring, not a benefit in kind
Once there is consideration, the arrangement stops being a benefit and becomes the hiring of a means of transport. For long-term hiring to a non-taxable person, article 259 A du code général des impôts places the supply where the customer lives. If the employee lives in France, the VAT is French.
What the German administration changed
The instruction of 3 March 2026 treats the private use of a company car as a barter-like supply once it is individually agreed in the employment contract and actually taken up. The place of supply then moves to the employee’s home, under § 3a Abs. 3 Nr. 2 Satz 3 UStG. The transitional tolerance ended on 30 June 2026.
France does not follow automatically
Ruling BOI-RES-TVA-000161 of 30 April 2025 requires consideration to be stipulated: a payment, a salary sacrifice, the surrender of a named benefit. Without it, France does not treat the arrangement as hiring for consideration.
| Consideration | German reading | French reading |
|---|---|---|
| stipulated in the contract | long-term hiring, taxable at the employee’s home | hiring for consideration, taxable at the employee’s home |
| merely practised | barter-like supply, taxable at the employee’s home | no hiring for consideration |
| none | outside the scope since 1 July 2026 | outside the scope |
The same car can therefore be taxable at the employee’s home seen from Germany and outside the scope seen from France. The reverse case costs more: two states claiming the same tax. What settles it is the contract, not the practice at head office.
What to look at
- Where the employee lives, and since when
- Whether consideration is in the contract or merely practised
- Whether VAT on the purchase or lease of the car was deducted
- Whether a French registration is needed or the one-stop shop is enough
We read the contract, settle the place of supply and take on what follows in France: registration, returns, correspondence with the administration. When a French registration becomes necessary
The question of deducting VAT on the car itself is answered separately. Deduction is possible again
A case is pending before the German Federal Fiscal Court under V R 42/25. Until it is decided the current administrative position applies, and the situations concerned are worth documenting.
Sources: CJEU, 20 January 2021, case C-288/19 “QM”; BOI-RES-TVA-000161 of 30 April 2025; German Federal Ministry of Finance instruction of 3 March 2026; BFH, pending case V R 42/25.