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. Continue reading
Tax & Legal
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. Continue reading
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. Continue reading
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. Continue reading
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. Continue reading
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 private use of a company car may be valued at 1% per month of the manufacturer’s list price of the car when new – the “1% rule”. However, it is open to the taxpayer to value the private-use benefit at actual cost to the company allocated between business and private travel on the basis of an accurate and detailed log of all business travel – the “log rule”. A general manager with the private use of a luxury car leased by the company after it had been used for three years has challenged the list price of the car when new as the basis for the 1% rule on the grounds that it was irrelevant to his personal circumstances. The Supreme Tax Court has now rejected this challenge.
The court took the view that the 1% rule was an intentional generalisation. As such it could not lead to an accurate result in specific cases. It was therefore, on its own terms, not open to attack on specific aspects. As a generalisation ignoring such basic aspects as actual private mileage and actual running costs of the vehicle, it was constitutionally acceptable, given that each and every taxpayer had the alternative of keeping a proper log as a basis for applying the log rule. Thus, even if the taxpayer’s complaint were justified in the present instance, he was not prevented from taxing his benefit on the basis of its actual cost. There was thus no breach of the constitution.
Supreme Tax Court judgment VI R 51/11 of December 13, 2012, published on March 6, 2013
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.