In 2018, companies can recover 20% of the VAT on fuel expenses in France

Until now, companies could not deduct VAT on gasoline when this fuel was used in passenger cars. On the other hand, in 2017, a deduction of up to 10% was allowed for commercial vehicles.

As of January 1, 2018, this partial deduction is increased to 20%, regardless of the type of vehicle (passenger car or utility vehicle).

The right to deduct VAT is subject to compliance with several conditions. In particular, the company must use the fuel for the purposes of its activity which is in itself subject to VAT. And it must be in possession of an invoice mentioning the VAT amount.

Example: a company pays a fuel bill of 600 € including 100 € of VAT. Under this new rule, it will be able to deduct € 20 (€ 100 x 20%).

The deductible VAT fraction will increase to 40% in 2019, 60% in 2020 and 80% in 2021. Only commercial vehicles will benefit from a 100% deduction from 2022 onwards.

For more information, contact Bettina Cassegrain from the indirect tax team at French HLB member firm COGEP (This email address is being protected from spambots. You need JavaScript enabled to view it.).