When an employee has permission to use his/her company car for private use or to travel from home to work with it, this results in a taxable benefit in kind for the employee. This advantage is determined using a calculation formula in which various factors, including the CO2 coefficient, play a role.
The formula for calculating the benefit in kind is as follows:
catalog value x quotient date of first registration x useful life x CO2 percentage x 6/7
1. Catalog value:
List value means the list price of the vehicle in new condition when sold to a private individual, including options and value added tax actually paid, without taking into account any discount or reduction.
In short, because the catalog value is below:
the list price;
all options and accessories;
the value of the so-called option packs that are offered for free;
the VAT actually paid (for second-hand vehicles: the VAT as stated on the purchase invoice);
excluding discounts and reductions.
2. Date of first registration:
The first registration date quotient starts at 100% when a vehicle is brand new. For each year of vehicle age, 6% is degressively deducted from this quotient, with a lower limit of 70%.
Year 1: 100%
Year 2: 94%
Year 3: 88%
Year 4: 82%
Year 5: 76%
From year 6: 70%
3. The usage time:
The period of use is calculated from the date the driver has access to the vehicle until the penultimate day of use. The first day must always be counted as a full day, and the last day is not included. In the formula, the duration is divided by the number of days in the calculation year and then multiplied by the number of days of use during the current pay period.
For example: For the month of March '24 the following fraction would apply: 31/36 6 (leap year).
4. The C02 percentage
When calculating the benefit in kind, we also take into account the CO2 emissions of the vehicle.
The basic percentage for the calculation is 5.5% and is increased according to the principle below, depending on the type of combustion engine.
A reference emission of 65 g/km (2024) is used for vehicles with a diesel engine and 78 g/km (2024) for vehicles with another type of engine.
If the emissions are higher than the reference CO2 emissions, the calculation percentage is increased by 0.1% per CO2 gram to a maximum of 18%.
If the emissions are lower than the reference CO2 emissions, the calculation percentage is reduced by 0.1% per CO2 gram to a minimum of 4%.
For an electric car we always use the minimum percentage of 4%.
For more information about the reference CO2 emissions, please visit the following article: Commercial vehicle – adjustment of reference CO2 emissions.
5. Minimum amount
The minimum amount of the benefit in kind (VAA) will increase to € 1,600.00 in 2024 (instead of € 1,540.00 in 2023).
EXAMPLES (2024):
Below are some examples of calculating the benefit in kind for the payroll period March 2024. The useful life is always set to 31/366. (31 calendar days in the month of March 2024 compared to 366 calendar days in the year 2024)
Example 1: BMW X1
List value: €52,000.00
CO2 emissions: 145 g/km
Fuel: Diesel
Registration date: 19/06/2017
€52,000 x 70 % (Registration date) x 31/366 x 13.5% (5.5% + (145 g/km – 65 g/km) x 6/7 = €356.75 taxable benefit in March 2024.
Example 2:
Opel Insignia
List value: €43,050.00
CO2 emissions: 134 g/km
Fuel gasoline
Registration date: 18/05/2022
€43,050.00 x 88% (Registration date) x 31/366 x 11.1% (5.5% + (134 g/km – 78 g/km) x 6/7 = €305.29 taxable benefit in March 2024.
Example 3:
Polestar 2 Long Range Single Motor
List value: €58,333.88
CO2 emissions: 0 g/km
Fuel: Electric
Registration date: 01/01/2024
€58,333.88 x 100% (Registration date) x 31/366 x 4% x 6/7 = €159.24 taxable benefit in March 2024.
Curious about alternatives to a company car or would you like to get started with company cars yourself? Contact Rovoco!