When a company vehicle is provided to an employee for both professional and personal use, the personal use of the vehicle constitutes a benefit in kind. Whether the employer owns or leases the vehicle is irrelevant.
No benefit in kind is applicable in the following scenarios:
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Situation 1
When the employee is required to return the vehicle to the employer on each weekly rest day and during holiday periods.
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Situation 2
When the employee has permanent access to a vehicle but is prohibited from using it during the weekly rest day and during holiday periods. This prohibition must be communicated in writing (internal regulations, company circular, paper, or electronic communication from management).
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Situation 3
When the employee is required to return the vehicle during the weekly rest day and holiday periods but still has access to the company car for commuting between home and workplace. This is acceptable if it can be demonstrated that such use is necessary for work-related activities. The employer must prove that the employee cannot use public transport due to the commute not being served or being poorly served, or due to specific working conditions or hours.
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Situation 4
When the employee pays a financial contribution exceeding the actual or flat-rate amount of the benefit in kind.
The assessment of the benefit in kind is at the employer’s discretion, either based on the actual expenses incurred or based on a lump-sum.
Expenses actually incurred:
For a purchased vehicle, actual expenses include:
- Depreciation of the purchase value of the vehicle (including VAT) over 5 years at a rate of 20% per year;
- Insurance;
- Maintenance costs (servicing, tire changes, oil changes, etc.) including VAT.
If the vehicle is more than 5 years old, the depreciation percentage used is 10%.
For a leased vehicle, actual expenses include the total annual cost of the lease, plus insurance and maintenance costs, all taxes included.
The benefit in kind is calculated by applying the ratio between the mileage travelled by the employee for personal use and the total mileage to the total expenses.
Fixed price evaluation:
If a vehicle is provided, whether purchased or leased, the lump-sum valuation will be proportionate to the number of months and will be as follows:
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For a purchased vehicle
The benefit is equal to 9% of the purchase cost including tax (6% if the vehicle is more than 5 years old).
If the employer pays the employee for the fuel, this additional benefit is deducted:
– Either for its actual amount;
– Or by increasing the rate to 12% of the purchase cost, inclusive of tax (9% if the vehicle is more than 5 years old). -
For a leased vehicle
When the employee pays the fuel costs, the valuation resulting from private use is equal to 30% of the total annual cost including tax, including leasing, insurance, and maintenance.
When the employer pays for the fuel, the assessment is made:
– Either on 30% of the total annual rental cost (rental, insurance, and maintenance) plus actual fuel costs for personal use;
– Or 40% of the total annual rental cost (rental, insurance, and maintenance), and total fuel costs used for business and personal purposes.
CAUTION: When the employer provides an employee with a vehicle powered exclusively by electric energy until 31 December 2024:
- Electricity costs paid by the employer are not considered when calculating the benefit in kind;
- A deduction of 50% must be applied to the entire benefit in kind. The amount of this deduction is capped at €1.800 per year.
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