The EU's five biggest members spend €42bn (R803.73bn) annually subsidising fossil-fuel company cars, according to a study commissioned by environmental group Transport & Environment (T&E), which called for more subsidies for EVs instead.
Company cars make up around 60% of new car sales in Europe.
Italy provides €16bn (R306.32bn) in subsidies for fossil-fuel company cars, followed by Germany, which provides €13.7bn (R262.29bn), showed the study by consultancy Environmental Resources Management (ERM) released on Monday.
France and Poland provided €6.4bn (R122.53bn) and €6.1bn (R116.79bn) annually respectively.
Companies offer cars as perks for employees, often with significant benefit-in-kind subsidies including offsetting consumer taxes and fuel usage benefits.
Around €15bn (R287.18bn) across the four countries goes to subsidising SUVs, the study found. Company car drivers receive an average annual tax benefit of €6,800 (about R130,177), ranging up to €21,600 (about R413,503) for high-polluting larger models.
"It is completely illogical and unacceptable that we're pouring billions of taxpayer money into a technology that's completely contradictory to the European Commission's green transition agenda," T&E's director of fleets Stef Cornelis told Reuters.
The study comes as Europe's EV sales have fallen, in part because they are more expensive than fossil-fuel equivalent models and thus out of reach for many consumers.
Sales of fully electric cars slumped 43.9% in the EU in August as its biggest EV markets Germany and France recorded drops of 68.8% and 33.1% respectively, according to industry data.
The ERM study found financial incentives for drivers of company cars to switch to EVs are only provided in former EU member the UK.
European Commission president Ursula von der Leyen told the EU's new climate chief Wopke Hoekstra in a letter dated September 17 that one of Hoekstra's priorities will be to propose how to phase out fossil-fuel subsidies.
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