Taxation of Motor Insurance Policies: France

James Brown
December 18, 2024

France is one of the most challenging countries in Europe when it comes to the premium tax treatment of motor insurance policies. This is mainly due to the variety of taxes and charges that can apply and the differing treatment of different vehicle types.

This blog provides all the information you need to know about the correct treatment in France.

As with our dedicated overviews of the taxation of motor insurance policies in SpainNorway, Italy and Austria, this blog will focus on the specifics in France. We also have a blog covering the taxation of motor insurance policies across Europe.

Which taxes are payable in relation to motor insurance policies in France?

First and foremost, Insurance Premium Tax (IPT) applies to motor insurance provided in France. The rate can vary (rates correct as of December 2024):

  • The standard rate for risks of any type relating to motor vehicles is 18%
  • The rate is usually 33% in the case of compulsory class 10 motor liability coverage
  • The rate for compulsory class 10 coverage is reduced to 15% for coverage provided to commercial agricultural vehicles and commercial vehicles greater than 3.5 tonnes

Class 3 motor cover is treated as a form of property coverage within the scope of contributions to the EUR 6.50 Common Fund for Victims of Terrorism when located in France. There is also a requirement to collect a CATNAT premium (with specific rates for motor coverage which are increasing from January 2025). IPT and contributions to the Major Risk Prevention Fund are due on this premium.

Compulsory class 10 cover triggers National Guarantee Fund contributions. This currently results in three separate rates applicable to premiums, set at 1.2%, 0.8% and 0.58%, respectively.

Finally, it is worth noting that class 3 or 10 coverage of vehicles used for agricultural operations may be excluded from the scope of contributions to the Major Risk Prevention Fund. They do, however, result in separate contributions of 11% due to the National Agricultural Risk Management Fund.

How are taxes on motor insurance policies calculated in France?

The majority of taxes and charges on motor insurance policies in France are calculated as a percentage of the taxable premium and are directly charged to the insured. There are some exceptions, though.

Where applicable, the 0.58% National Guarantee Fund contribution and contributions to the Major Risk Prevention Fund are both insurer-borne so do not result in direct additions to the premiums charged to the insured.

The EUR 6.50 contributions to the Common Fund for Victims of Terrorism are a fixed fee and apply to each insurance contract per annum – regardless of the premium value.

It should also be noted that the IPT treatment of motor insurance can be extended to include ancillary coverage, such as passenger accident cover. This is because the IPT treatment applies to risks of any nature relating to land motor vehicles. It is important to assess each risk to determine whether it is considered a risk related to land motor vehicles as this can be a contentious area in French law.

What vehicles are exempt from tax in France?

Electric vehicles are subject to an IPT exemption, albeit this was amended from January 2024 so that 75% of the premium was treated as exempt (with the remaining 25% being taxable as normal).

A 75% exemption applies to insurance incepting in 2024 for vehicles registered in 2024, but only in relation to the first insurance contract following the vehicle’s registration up to a maximum of 24 months. There is no law currently in effect extending this treatment for vehicles registered in 2025, so such vehicles will not benefit from the 75% exemption as it stands.

Coverage of any nature relating to commercial agricultural vehicles and commercial vehicles greater than 3.5 tonnes benefits from a full IPT exemption, except compulsory class 10 coverage. However, this does not provide an exemption from the applicability of the parafiscal charges mentioned above.

If you still have questions about the taxation of motor insurance policies or IPT in France, speak to our experts.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

James Brown

James Brown is a Consultant at Sovos. His academic background is in Law having studied the subject at undergraduate level, and he has since enjoyed various roles in the IPT Managed Services Department at Sovos.
Share this post

Greece B2B E-invoicing
E-Invoicing Compliance EMEA
January 14, 2025
Greece: Mandatory B2B E-invoicing Possible From July 2025 After EU Derogation

Greece has been in the process of implementing mandatory B2G e-invoicing over the past few years, with a B2B e-invoicing mandate expected to follow. Following reports that Greece had requested a derogation to introduce mandatory B2B e-invoicing in 2024, the European Commission has published a proposal for a Council Implementing Decision to grant this authorisation. […]

SAP Clean Core implementation
EMEA Tax Compliance
January 6, 2025
SAP: Your Business’ Path to Clean Core

In the first blog in our series, we introduced SAP Clean Core concept and how much is being made about its impact on business, specifically the ability to customize an ERP to meet operational needs. In part two, we addressed how businesses can use the SAP Clean Core principles to create a system that better […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
VAT in the Digital Age Approved in ECOFIN

The long-awaited VAT in the Digital Age (ViDA) proposal has been approved by Member States’ Economic and Finance Ministers. On 5 November 2024, during the Economic and Financial Affairs Council (ECOFIN) meeting, Member States unanimously agreed on adopting the ViDA package. This decision marks a major milestone in modernizing the VAT Directive, setting the stage […]

what is peppol
E-Invoicing Compliance EMEA North America
October 29, 2024
What it is PEPPOL?

Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing mandate to digitise fiscal controls, the requirements and systems […]

French tax authority cancels free invoice exchange
EMEA VAT & Fiscal Reporting
October 16, 2024
How Do Changes to the French e-Invoicing Mandate Impact My Business?

By Christiaan Van Der Valk  The French tax administration has just announced structural changes to the 2026 French e-invoicing mandate that will discontinue the development of the free state-operated invoice exchange service. This decision will put increased pressure on taxpayers and software vendors to select a certified ‘PDP’ to fill the void created by this […]