Fringe Benefits in 2025: What Will Be the Impact on Hybrid Vehicles?
With the 2025 reform of the benefit-in-kind (BIK) system on the horizon, one question keeps coming up: Do hybrid and plug-in hybrid vehicles also receive preferential treatment, just like electric vehicles?
The answer is clear: no. The reform now treats hybrid vehicles the same as conventional vehicles.
- AEN, New
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The rule is clear: hybrids are treated as conventional vehicles
Since the reform, no distinction is made between a conventional vehicle, a mild hybrid, or a plug-in hybrid when calculating the benefit in kind. These vehicle types are now subject to the same tax brackets and rate increases as gasoline or diesel vehicles.
In other words, the term “hybrid” does not confer any specific tax benefits. While confusion is common, it is important to remember that, under the 2025 Fringe Benefits Reform, “hybrid” no longer equates to lower taxes. Both companies and employees must therefore reassess their calculations of overall costs and TCO (Total Cost of Ownership), as the savings once expected from hybrid powertrains are no longer applicable. This change reflects the legislature’s intent to encourage the transition to 100% electric vehicles, the only segment still eligible for tax benefits. Fleets wishing to benefit from more favorable treatment will therefore need to consider fully electrifying their fleets in the medium term.
It is also important to note that this change directly impacts corporate vehicle policies. Fleet managers must now incorporate these new rules into their procurement and replacement strategies, paying closer attention to the tax implications of different engine types. For their part, employees with hybrid company cars may see their benefit-in-kind increase, even though their usage or carbon footprint has not changed. This tax harmonization marks another step toward standardizing the treatment of hybrid vehicles.
New 2025 scales: adjusted rates that increase the value of benefits in kind
The 2025 tax rates fundamentally redefine how the benefit-in-kind for non-electric vehicles is calculated. These rates, which are now higher, standardize the tax treatment and result in a significant increase in costs for the companies and employees affected.
Higher rates for purchased or leased vehicles
New vehicle (≤ 5 years old): 15% of the purchase price including tax (up from 9% previously).
Leased vehicle (long-term lease/lease-to-own): 50% of the total annual cost (compared to 30% before the reform).
Practical example: Let’s take a model priced at €45,000:
Before 2025: 9% × €45,000 = €4,050 in annual flat-rate AEN.
Since 2025: 15% × €45,000 = €6,750 in AEN.
The result: an increase of more than 65% in the employee’s taxable benefit. This increase reflects the government’s commitment to harmonizing the programs and promoting the transition to fully electric vehicles.
A direct impact on costs and procurement strategy
This change has tangible implications for fleet financial management. Companies must now factor these new rates into their total cost of ownership (TCO) calculations and adjust their allocation policies. The increase from 30% to 50% for long-term leases, for example, raises the reported tax burden and can influence financing decisions.
To limit the impact, it is essential to run simulations before any new vehicle purchase or renewal, in order to anticipate the rise in tax costs and identify the most advantageous options in the long term.
Electric vehicles: the big winners under the new tax system
In the face of this widespread increase, 100% electric vehicles clearly stand out. Thanks tothe 70% tax deduction, which will remain in effect through 2025, they continue to offer a particularly attractive benefit-in-kind scheme. Their tax cost remains well below that of traditional engines, encouraging companies to gradually electrify their fleets.
In addition to the tax benefits, electric vehicles offer lower operating costs (maintenance, energy, insurance), making their adoption even more relevant in the medium term. This preferential treatment illustrates the direction the government wishes to take: accelerating the energy transition of France’s commercial vehicle fleet.
The policy goal: to encourage the transition to 100% electric vehicles
This decision is not an oversight or a calibration error, but a deliberate policy choice.
By eliminating incentives for hybrid vehicles, the government aims to accelerate the transition to all-electric vehicles.
Hybrids, long presented as an intermediate step, are now viewed as a transitional solution for which tax incentives are no longer justified.
As a result, the difference in treatment between hybrids and electric vehicles is being deliberately emphasized to influence the purchasing decisions of businesses and fleet managers.
In 2025, the rule is clear: for the benefit-in-kind tax, a hybrid vehicle is classified as a conventional vehicle. While tax rates are increasing for hybrids as well as for gasoline and diesel vehicles, 100% electric vehicles continue to enjoy exceptionally favorable treatment thanks to the 70% tax deduction.
A strong signal from the government: the tax future of corporate fleets is firmly electric. This policy reflects a clear commitment to encouraging companies and employees to prioritize zero-emission vehicles when purchasing or renewing their fleets. In practice, this means that the cost of operating a hybrid vehicle becomes comparable to that of a combustion-engine model, reducing the financial appeal of this intermediate powertrain. For an employee, the impact can be significant: the benefit-in-kind calculated on a hybrid vehicle will result in an increase in taxable income, without any additional environmental or tax benefits.
For businesses, this reform is fundamentally changing procurement strategies. Fleet managers must now revise theirpurchasing policies to limit the rise in total cost of ownership (TCO). Electric models, although still more expensive to purchase, retain a clear advantage over the long term thanks to lower taxes and reduced maintenance costs. In the medium term, this trend could accelerate the phasing out of hybrids in commercial fleets in favor of full electrification.
For employees, there is also an economic incentive: choosing a fully electric vehicle not only reduces the value of the fringe benefit but also offers a more comfortable driving experience and an image that is more in line with their company’s CSR policies.
In short, the 2025 reform marks a clear transition: hybrid vehicles are no longer viewed as a temporary tax or environmental solution. The government is paving the way toward fully electric corporate mobility, where costs, taxation, and benefits now converge toward a single goal: the sustainable decarbonization of business travel.
