TLDR: VAT deduction is excluded for vehicles designed for passenger transport or mixed use (passengers and goods), except in specific cases. The determining criterion is the vehicle's design, not its actual use. Exceptions exist for certain vehicles in categories M (M2, M3, DERIV VP), N, L, O, as well as for vehicles adapted for equine transport (since 2024) or used for rental under certain conditions.
General principle of exclusion
VAT deduction is excluded for vehicles or equipment designed to transport passengers or for mixed use, if they constitute a fixed asset or are not intended for resale in new condition. This exclusion also applies to constituent elements, spare parts, and accessories of these vehicles. The determining criterion is the vehicle's design, assessed at the time of acquisition or leasing, not its actual use.
Vehicle categories concerned
Category M vehicles
Vehicles in Category M (designed for transporting passengers and their luggage) are excluded from the right to deduction, regardless of their body type. This includes passenger cars, multi-purpose vehicles, or motorhomes.
Exceptions for Category M
- M2 and M3 vehicles (with at least 9 seats, in addition to the driver): deduction is possible if they are assigned to transporting the company's personnel to their workplace or, for public transport companies, to passenger transport.
- Vehicles assigned to public passenger transport: ambulances or hearses actually used for transporting patients or the deceased.
- DERIV VP vehicles: reversible adaptation (planned from the design stage) to prioritize goods transport. In France, this applies only to hatchback cars, station wagons, and multi-purpose vehicles converted to have only one row of seats and an adapted loading space.
Category N vehicles
Vehicles in Category N (designed for transporting goods) are not excluded from the right to deduction, unless they have at least three rows of seats (excluding jump seats) or equipment identical to that of a motorhome. For N1 category pickup trucks, the exclusion threshold remains set at two rows of seats (excluding jump seats).
Category L and O vehicles
- Category L (quadricycles and three-wheeled vehicles): excluded, unless they are classified as utility vehicles.
- Category O (trailers): excluded if they have at least two rows of seats or a habitable compartment.
Special cases
Vehicles adapted for equine transport
Since 1 January 2024, vehicles adapted for equine transport (e.g., with a cabin-living space for the driver and carers) qualify for VAT deduction, even if they are designed for mixed use.
Rental vehicles
The exclusion does not apply to vehicles rented out, provided that:
- the rental is subject to VAT;
- the vehicles are exclusively assigned to the rental activity.
Accessory expenses
The costs of fitting out excluded vehicles follow the same regime: the VAT on these costs is not deductible if the vehicle is designed for passenger transport or mixed use.
Electricity for excluded vehicles
VAT on electricity consumed by excluded land vehicles may be deducted if:
- the vehicles are used for operations qualifying for deduction;
- they operate exclusively on electric power.
Vehicles intended for resale
Vehicles designed for passenger transport or mixed use qualify for deduction only if they are intended for resale in new condition. Demonstration vehicles are excluded.