VAT recovery on petrol and diesel on equal footing in France

Up to 100% of VAT on petrol incurred in France can now be recovered. That means VAT recovery opportunities are equivalent to those pertaining to diesel. 100% of VAT on petrol used for commercial vehicles, and 80% of VAT on passenger vehicles, can now be reclaimed. 

In contrast to VAT on diesel, up until 2016, it was not possible to claim back any VAT on the purchase of petrol for vehicles. Since then, the recoverable amount has steadily increased. 

Increased cost of running petrol vehicles 

VAT-registered businesses should, of course, ensure they take full advantage of VAT reclaim opportunities. For many private motorists, however, the cost of running an internal combustion vehicle is set to increase. The threshold for penalties on non-electric vehicles has been lowered from 133g of CO2 per km to 128k per hm.  

The carrot-and-stick approach - a mix of penalties and incentives - has seen tremendous success in some countries. For example,  almost 80% of total car sales in Norway in September 2021 were electric vehicles. The rate of uptake can be explained, in part, by the country’s VAT exemption on electric vehicles. 

VAT and EU regulations 

Some politicians in France have called for VAT on fuel to be drastically lowered, in order to provide relief to motorists. However, President Macron says that VAT cannot be lowered beyond the threshold determined by EU law. He added that VAT on fuel ultimately benefits all motorists in France. 

Maximise VAT recovery opportunities

Recovering VAT on petrol and diesel is an effective way to cut the cost of business, especially if you operate a large fleet. However, as the rules are complex and vary from country to country, many businesses fail to effectively take advantage of this reclaim opportunity. 

Don’t miss out. Get in touch with VAT IT for an effective, accurate and comprehensive VAT reclaim solution for your business.