Tax & Legal

The Supreme Tax Court decided that the taxable benefit from private use of a company car may not be reduced by parking costs borne by the employee. The provision of a parking space or garage free of charge is considered separate to the benefit in kind of using a company car for private trips.

In December 2016 the Finance Ministry issued a decree dealing with the tax implications of privately used comapny cars in case of a leasing, whereby also commenting on an earlier judgment of the Supreme Court on a so called "government lease".

The finance ministry has decreed that an employee may value the benefit in kind of a driver for his company car at either the actual salary costs of the driver or at 50% of the benefit value of the car.

The finance ministry has published a decree with sample calculations of the taxable benefit from the private use of a company car powered by electricity.

The Supreme Tax Court has held that the taxable benefit from the provision of a chauffeur-driven company car to enable an employee to get to work includes the value of the chauffeur’s services.

The Supreme Tax Court has held that permission to use a company car privately is, of itself, a taxable benefit, even if there is no actual private use. The benefit can only be valued at zero on the basis of a proper mileage log. On the other hand, there is no presumption of private use where this is prohibited, even if an infringement of the prohibition would be without labour law or other consequences for the employee. The court also held that golf club membership fees are a private benefit, even if the membership was taken out for business reasons.

The finance ministry has decreed that lump sum and pro rata payments by the employee reduce the company car benefit in kind whilst the assumption of specific costs does not.

The Supreme Tax Court has held that there is no constitutional objection to valuing the private use of a company car at 1% per month of the manufacturer’s list price when new, given the alternative of assessing the benefit at actual cost.

The finance ministry has modified the rules on taxing the benefit of driving to work in a company car in the light of Supreme Tax Court judgments holding that the benefit should be based on the actual journey.

The Supreme Tax Court has reaffirmed its position that the taxable benefit from using a company car to go to work depends on the actual use of the car. By contrast it now has doubts on the provision of a chauffeur as a benefit.