Benefit in Kind – Company Vehicle: A Stricter Evidentiary Framework?
The provision of a vehicle by an employer for the benefit of employees, when it includes private use, constitutes a benefit in kind (BIK) subject to social security contributions, in accordance with Article L. 242-1, paragraph 1 of the French Social Security Code and the decree of December 10, 2002 (Article 3, paragraph 1). This rule remains applicable even when the vehicle is provided through a third party (BOSS-AN-30; Cass. 2nd Civ., June 21, 2018, No. 17-21.652).
Increased Scrutiny on the Burden of Proof
In a recent ruling on January 9, 2025 (Cass. 2nd Civ., No. 21-15.766 and 21-25.916), the French Supreme Court shifted its case law by reinforcing the burden of proof imposed on the employer regarding BIK for company vehicles.
In the case at hand, an association made vehicles permanently available to employees for both professional and personal use. Employees paid an annual membership fee, while the employer settled invoices issued by the association. However, the French social security agency (Urssaf) conducted an audit and imposed a reassessment, considering that:
- The cost of private vehicle use was not fully covered by the employees’ contribution, thus constituting a BIK;
- The employer failed to justify the strict professional use of the vehicles by its employees;
- The invoices paid by the employer did not sufficiently demonstrate that only professional expenses were covered.
A Shift in the Burden of Proof
The Supreme Court upheld Urssaf’s position, specifying that:
- Urssaf must initially establish that the employer permanently provides vehicles to employees.
- It is then up to the employer to demonstrate that such provision does not constitute a BIK, even when the vehicle is supplied by a third party.
- To this end, the employer must prove that it only covers the cost of strictly professional mileage, through compelling evidence beyond mere invoices issued by the third party.
As a result, in the absence of sufficient proof that the amounts paid covered only professional expenses, the reassessment based on a lump-sum evaluation of the BIK was deemed justified.
A Departure from Previous Case Law
This judicial evolution departs from previous rulings, where the Supreme Court had held that the burden of proof primarily rested with Urssaf (Cass. 2nd Civ., May 11, 2023, No. 21-24.242; Cass. 2nd Civ., December 9, 2021, No. 20-14.050; Cass. 2nd Civ., September 22, 2022, No. 21-10.760).
Going forward, employers must implement strict monitoring and documentation of their employees’ professional mileage and provide clear evidence that there is no BIK associated with the private use of company vehicles.
Recommendation: Given the tightening of Urssaf’s control measures, companies using similar arrangements must anticipate and prepare robust evidence (detailed logbooks, specific attestations, precise justifications) to avoid reassessments.