Benefit in kind tax

Changes for the private use of company cars!
Here is an overview of what is new and what it means for you.

The tax reform brings some changes for the private use of company cars. For your convenience, we have summarized what changes will enter into effect on 01 January 2016, and how they affect you as the fleet manager:

New is that the benefit in kind tax for company cars is calculated depending on the CO2 emissions and the year of purchase of the vehicle.

Vehicles with low CO2 emissions are less expensive to drive!

  • Generally, the benefit in kind tax as of 01 January 2016 is 2 percent of the actual gross purchase price or a maximum of EUR 960.00 per month.

  • For vehicles with a CO2 emission level of up to 130 g/km, the benefit in kind tax is 1.5 percent of the purchase price (maximum of EUR 720.00 per month).

Thus, vehicles with low CO2 emissions will be given a significant tax advantage in the future.

Beginning in 2017, the CO2 emission limit will be reduced by 3 g/km each year. From 2021 onwards, the CO2 emission limit of 2020 with 118 g/km will be the standard.

The table below shows the CO2 limits for each year of purchase:

Year the vehicle is purchased CO2 limit
  Up to 2016     130 g/km
  2017   127 g/km
  2018    124 g/km
  2019     121 g/km
  2020 onwards   118 g/km



        
                 
                 
              
     

The calendar year in which the vehicle is purchased is decisive for the calculation of the benefit in kind tax.

For a vehicle that is purchased in 2016 and has a CO2 emission of 130 g/km, a benefit in kind tax of 1.5 percent will apply. If the same vehicle is purchased in 2018, however, the benefit in kind tax will be 2 percent.

What about electric vehicles?

Fully electric vehicles (CO2 emissions = 0) are entirely exempt from the benefit in kind tax from 2016 onwards. In addition, the same tax rules apply for these vehicles as for other vehicles eligible for a pretax deduction.

So what do you need to do?

  • Inform the employees: The new benefits in kind regulation applies to newly purchased vehicles as well as to those already in use. Thus, employees who already use a company car privately are affected by the new regulation. Inform your employees about the impact of the new regulation.    

  • Adjust the car policy: Adjust your car policy to the new regulations by specifying CO2 limits for the choice of vehicles available.

  • Reconsider the composition of your fleet: Which mix of vehicles makes sense under the new regulation? After all, a company car is not only a cost, but for many employees also a motivational factor.


As a brand-independent provider, ALD Automotive is happy to help you with the vehicle selection and composition for your fleet. Simply contact us!