Newsletter April 2024

Adjustment of wrongly invoiced VAT

On November 29, 2023, the Conseil d’Etat handed down a ruling in favor of a customer who had been wrongly invoiced for undue VAT. It confirms that the customer will be able to obtain regularization.

To do this, he should first ask the supplier to refund the tax, and then, if this fails, take legal action. However, if it proves impossible to obtain the wrongly invoiced VAT from a bankrupt supplier, or if it is clearly difficult to do so, notably in the event of the supplier’s insolvency, he should contact the tax authorities.

The new “C3IV” green industry investment tax credit comes into effect

The scheme is designed to benefit industrial projects, and more specifically companies producing the goods concerned. The scheme does not apply to the acquisition/installation of such goods. For example, the installation of photovoltaic panels is not eligible for C3IV.

This tax credit comes into effect on March 14, 2024, for a period of 3 years. Only approved industrial and commercial companies will be eligible.

In addition, it applies only to certain goods, such as batteries, solar panels, wind turbines and heat pumps. Capital expenditure eligible for this tax credit is limited to :

• The manufacture of battery cells, photovoltaic cells, onshore and offshore wind turbines and heat pumps;
• The manufacture of other essential components designed and used mainly in the production of batteries, solar panels, wind turbines and heat pumps;
• The extraction, production, processing and recovery of critical raw materials for batteries, solar panels and wind turbines;

Finance Act 2024: sharp rise in taxes on the use of vehicles for economic purposes (ex-Company Vehicle Tax)

The new tax on the use of vehicles for economic purposes has two components:

• Annual tax on CO2 emissions
• The annual tax on vehicle emissions of atmospheric pollutants, which replaces the annual tax on age, introduced in 2023.

A number of factors need to be taken into account, as the scales become progressive, with rates revised upwards. Rates will rise progressively each year until 2027.

Previously, the tax rate was determined according to three different methods depending on the vehicle’s characteristics, and in particular its type-approval protocol:

• Thus, for vehicles registered in principle from March 1, 2020, the rate is determined according to the exact amount of carbon dioxide emissions per kilometer.
• For vehicles registered for the first time on or after June 1, 2004 and owned or used by a company before January 1, 2006, the tariff is also set according to carbon dioxide emissions (NEDC), but on a sliding scale.
• Lastly, for vehicles that do not fall into either of the above two categories, the tax rate is set according to their administrative horsepower.

These three conditions will remain in place from 2024, but the calculation of the applicable tariff has been modified and will increase progressively.

How does it work in practice?

Several tables summarizing and illustrating the evolution of rates for the coming years according to the two above-mentioned criteria are available on the government website. For example, for a vehicle registered from March 1er 2020 and emitting 175 g/km of CO2, the tax will amount to 2,000 euros in 2023, rising to 4,000 euros in 2027.

You’ll need to be particularly careful, choosing your vehicles according to their carbon dioxide emissions, or according to their administrative power (for vehicles first registered before June 1er 2004).

With rates already indicated up to 2027, companies can estimate the impact of this tax for years to come.

A few exceptions

Until now, certain hybrid vehicles were exempt from the CO2 emissions tax under article L 421-125 of the CIBS. This exemption will be abolished from 2025, on the grounds that these vehicles emit carbon dioxide.

However, an allowance will be introduced for vehicles whose energy source includes E85 superethanol. This allowance will amount to :

• 40% of carbon dioxide emissions, except where these exceed 250 g per kilometer;
• 2 administrative horsepower, except where this exceeds 12 administrative horsepower.

Similarly, for the tax on atmospheric pollutant emissions, the rate of this new component will be determined according to whether the vehicle belongs to one of the three following pollutant emission categories:

• Category E: electric vehicles, hydrogen-powered vehicles or a combination of the two.
• Category 1: vehicles powered by an internal combustion engine.
• The category of the most polluting vehicles that does not fall into any of these categories.

To sum up

Depending on the type of vehicle you own or wish to acquire, the amount of tax is set by the scale according to CO2 emissions or administrative power.

In the case of hybrid vehicles, the existing exemption will remain in force until the end of 2024, and they will be subject to tax from 2025. However, there will be an allowance for vehicles whose energy source includes E85 superethanol.

This reform has no impact on 100% electric or hydrogen-powered vehicles, or those combining the two, as they are not included in the CO2 emission quotas (CO2 tax) and are included in category E of the 0-euro air pollutant tax.