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Corporate Cars for Private Use-Tax Handling

Mon 02 Jan 2023

The charge from the use of the corporate car private use.

With additional taxable income in kind, thousands of employees, managers, and shareholders in companies are charged with clearing tax returns for using corporate cars to facilitate their work or even to exploit them for their personal needs.

An exception to this burdensome arrangement applies to Members, who are entitled to free cars by the House, without these vehicles being regarded for them as taxable benefits in kind.

1) If the amount of the retail price before tax (FTC) of a company car, granted free of charge for use to an employee or shareholder or partner of an undertaking; is greater than EUR 17 000 or if the vehicle, regardless of its size, is not used for business purposes; the FTL amount is then calculated using a percentage rate, the value of the supply of the car to the worker so that it is regarded as income from employed work and taxed cumulatively; together with the company's monetary remuneration, at rates ranging from 22% to 45%.

2) The value of the concession of a vehicle from an undertaking to an employee or a member or shareholder thereof, for any period in the tax year, shall be calculated as a percentage of the Retail Price Before Tax (FTL) of the vehicle as follows:

for FTPs between EUR 0 and 14 000 as 4% of FTPT

for FTPs from EUR 14.001 to EUR 17.000 as 20% of FTPT

for FTPs from EUR 17.001 to EUR 20.000 as 33% of FTPT

for FTPs from EUR 20.001 to EUR 25.000 as 35% of FTPT

for FTPs from EUR 25.001 to EUR 30,000 as 37% of FTPT

for FTPs of more than EUR 30 000 as 20% of FTPT, except that it is counted as a one-off rather than step-by-step

The value of the concession of a vehicle shall be calculated by applying the above progressive scale.

For example: in a car with a FTL of EUR 19,000 the value of the taxable benefit in kind is EUR 2,380,00. Also, where a company vehicle is used for less than one year (new recruitment, leaving a worker, etc.), the value of the benefit is calculated in proportion to the period (months) of its use, given that the duration of use of a company vehicle by an employee for more than 15 calendar days is calculated as a month.

3)  The value of the vehicle concession shall be reduced by age as follows: 

(i) 3-5 years reduction of 10%.

(ii) a 25% reduction of 6-9 years.

(iii) From 10 years onwards a 50% reduction.