Company car / Own car
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Company car / Own car Tax 2019 Tax
1 | Company car / Own car Content 1. Company car 1.1 Who are comprised 1.2 Calculation basis 1.3 Taxable value 1.4 Availability 1.5 Electric cars 2. Use of own car for business purposes 2.1 Own car 2.2 Transportation for business purposes 2.3 Tax-free mileage allowance 2.4 Set-offs 2.5 Documentation and bookkeeping 2.6 Reporting 3. Leasing 3.1 Low-taxed leasing cars 3.2 Flex leasing 3.3 Split leasing 4. Choice of company car scheme 4.1 Free app to more platforms
2 | Company car / Own car Making the choice of mileage allowance applying as of 1 January (conclusion of binding purchase, rental or the age of the car by the number of months 2019. leasing agreement). from the month of the car’s first registration. optimum car solutions is a complicated matter, 1. Company car The calculation basis does not change for a 1.1 Who are comprised company car (from the set of rules for new which requires profound Taxation of company car is triggered when the cars to the set of rules for used cars) – unless The original price The price of the car as new is the car’s considerations and analyses. car is made available to the employee by an the car is actually traded (changes owner) at a price including the registration tax, employer for private purposes. Therefore, the time that is more than 36 months after its VAT, costs of delivery and The big issue is whether it is an advantage to rules apply first of all to employees. A first registration. all usual equipment. There is have a company car at one’s disposal or cohabitant or spouse’s use of the company car a distinction between usual whether it will be better to use one’s own car does not trigger additional taxation. It is only Purchase of a company car upon the expiry of equipment and extra equipment, for business purposes with the possibility of the employee who can have a company car at the leasing period is considered change of pursuant to the Registration Tax Act. mileage allowance. A precise answer requires his/her disposal and, consequently, be subject ownership just like a sale-and-lease-back considerable calculations and depends to taxation. agreement. If a company car is handed over Usual equipment means equipment on thorough knowledge of the rules and to an affiliated company, for instance as part subject to registration tax, including practices of taxation of company car as well as The rules also apply to individuals, who of a restructuring, it can be considered an extra equipment in e.g. cars used for the conditions for paying out a tax-free are members of or assistants for boards, actual change of ownership, whereas sale and campaigns, if the equipment is mileage allowance when using one’s own car committees, commissions, councils etc. and repurchasing of the same car will not be mounted by the manufacturer or the for business purposes. for self-employed, who have chosen to apply accepted for tax purposes, unless the importer. the rules of the Business Tax Scheme. agreement can be justified clearly for Deloitte has developed an easily accessible business purposes. Pursuant to the Registration calculation model, which on the basis of a few 1.2 Calculation basis Tax Act, extra equipment can be parameters gives a very precise indication of Company car is a taxable benefit and the value New cars (less than 36 months old) exempted from the registration tax, if which choice will be the best in each individual is calculated as a standard percentage of the The calculation basis for new cars acquired the equipment is supplied and situation. The model can be downloaded car’s calculation basis. It is the mere right of no more than 36 months after their first mounted by the dealer according to as an app from www.deloitte.dk and is also disposal that is taxed. The extent of private use registration is the original price of the car as agreement between the dealer and described in section 4. is not important. new. This is called a date rule. After the first the user, and the equipment is stated 36 months, the calculation basis is 75% of the separately on the contract as extra This publication contains a brief introduction The calculation basis depends on whether the original price of the car as new. This is called equipment. to rules and practices for taxation of free car is more or less than 36 months old at the the month rule according to which the company car and payment of tax-free time when the employer acquires the car calculation basis is reduced on the basis of
3 | Company car / Own car Used cars (more than 36 months old) The environmental charge comprises the Example: The calculation basis for used cars acquired annual vehicle excise duty (including special The car is registered the first time on 20 October 2016. As from October 2019, the calculation basis is reduced, no matter whether the car is delivered later on, e.g. in November/December 2016. more than 36 months after the first charge for diesel cars without a particle filter, registration is the employer’s purchase but exclusive of equalising duty for certain DKK 2016 2019 2019 price including any renovation repairs diesel cars and extra charge for private use) x Jan-Sep Oct-Dec (opposite maintenance expenses). 1.5. Price of a new car (the original price) 480,000 480,000 480,000 When it comes to used cars, there is no Please note that any changes to the excise duty Reduction, after 36 months - - -120,000 distinction between usual equipment and will result in changes to the taxable value. extra equipment. The calculation basis is the Calculation basis 480,000 480,000 360,000 total purchase price of the car. What is included in the taxable value 25% of DKK 300,000 75,000 75,000 75,000 Operational costs, when using a company 1.3 Taxable value car, are included in the taxable value, and the 20% of amounts above 36,000 36,000 12,000 The taxable value of company car is equal to: employer can pay these costs without the + Environmental charge 6,750 6,750 6,750 employee being taxed additionally. These • 25% of the first DKK 300,000 of the (vehicle excise duty DKK 4,500) costs are general operational costs, e.g. costs calculation basis. for petrol/diesel, insurances, vehicle excise Taxable value per year 117,750 117,750 93,750 • 20% of the amount exceeding DKK 300,000. duty as well as repairs and maintenance, Taxable value per month 9,812 9,812 7,812 including drive-on products such as oil, wash, • Environmental charge. windshield fluid etc. Irrespective whether the calculation basis is Employee’s self-payment the price of a new car, 75% of the price of a Costs for garage, parking space, parking If, during the income year the employee has car, does not reduce the taxable value. Costs new car or the purchase price, the charges, ferry tickets, motorway charges, paid the employer – with net pay – for that the employee pays himself/herself, do, calculation shall always be based on the bridge toll and purchase of roof rack for skies, having the car at his/her disposal, the in principle, not reduce the taxable value. amount of minimum DKK 160,000. child seat etc. are not operational costs and, taxable value of the company car will be However, if the employee pays for general thus, not included in the taxable value. If the reduced by an equivalent amount within the operational costs, they can be reimbursed by Environmental charge employer pays such costs, they will be treated year in question. It is not important whether the employer as an outlay according to The taxable value is increased by an as taxable benefits, which must be taxed the self-payment is paid by installments over receipts submitted, or they can be set-off environmental charge. The charge is not separately. the year or as a one-off payment. Payment against the taxable value as a user charge, if included in the calculation basis, but is added after 31 December, or to others than the the employer does not want to reimburse (directly) to the taxable value. employer, who has provided the company them, see below.
4 | Company car / Own car For instance, if the employee pays for petrol 1.4 Availability the most expensive of the cars is taxed during in principle, that the car is de-registered in abroad – or other general operational costs – If the car is only available for private use part the actual month. CRM and the registration plates are handed they can be considered self-payments and, of the year, the tax value will be reduced by over to the Danish Tax Agency. thus, reduce the taxable value of the company the number of months during which the car The same applies if an employee changes job car. It is, however, a condition that: was not available to the employee. In this in the middle of a month and has a company 1.5 Electric cars respect, one month is a continuous 30-day car available from both workplaces. In this An electric car is, in principle, comprised by the period and not a calendar month. For case, the first employer must calculate and tax general rules on taxation of company car, if • The employee submits the original receipts instance, if the car has been available for the the value of the company car for the whole the car is made available for private use. The to the employer. period 1 January to 20 June and 10 August to month according to general terms and costs for electricity for recharging the car are • The employer books the amount as an 31 December, the employee must be taxed of conditions. The new employer must also included and treated in the usual way as costs operational cost and at the same time 11/12 of its annual value, because the period calculate the value of company car for the for petrol/diesel etc. credits an equivalent amount as income in with no car available is more than 30 days, but whole month during which the employee the form of self-payment in the company car less than 60 days. starts employment, but can against docu- Electric cars have been exempted from accounts. mentation set-off the value of the company registration tax until the end of 2015, and the In case of an occasional loan of a company car that has been reported by the previous calculation basis solely constitutes the Salary conversion car, the employee will also be taxed according employer. acquisition price including VAT. From 2016 to It is insignificant whether a company car is to the ordinary rules. This means that an 2023, there is a gradual phase-in of registra- included as part of the total remuneration employee must be taxed for a whole year, Storage/downtime insurance tion tax on electric cars. package or the employee contributes however, a deduction for the number of A frequently asked question is whether it is directly to the financing by accepting a whole months during which the car was not possible to avoid taxation of cars, which are If the employer pays costs related to the general and actual salary reduction. available will be granted. This means that a either put away for storage or which are installation of a power charger at the loan/availability period of only a few hours covered by a downtime insurance for employee’s residence, the amount should be A reduction of the gross/cash salary is actually triggers taxation of the value of a instance. However, neither downtime added to the “calculation basis”. not considered a self-payment for tax company car for minimum one month (1/12 insurance nor dismounting and deposit of purposes, because it is not made with net of the annual value). registration plates with e.g. an insurance pay. Consequently, taxation will take place company are sufficient to avoid taxation of a according to the ordinary rules, and a salary In case of changing cars in the middle of a company car. reduction can neither be set-off against nor calendar month, taxation of both cars should reduce the tax value. in principle be triggered in the actual month. To avoid taxation of a company car, it is However, if both cars have not been available decisive that an effective “deprivation of the at the same time, it will be accepted that only availability” has taken place, and this requires,
5| Company car / Own car 2. Use of own car for business purposes the parties have joint finances. A car that is When counting the 60 days, it is not important For 2019 the National Assessment If the employee uses his/her own car for registered in one of the parents’ name is also whether the transportation has taken place Council has determined these rates: business purposes, the employer can considered the son or daughter’s own car, when by one’s own car, another person’s car or by reimburse operating costs by paying out a tax- it can be documented that the son or daughter is public transport. The decisive factor is whether • DKK 3.56 per kilometre for the first free mileage allowance. the actual owner of the car, has financed the the employee has transported himself/herself 20,000 kilometres purchase and pays the operating costs. between his/her residence and the specific • DKK 1.98 per kilometre beyond this On the contrary, the employer cannot pay or workplace for more than 60 working days limit reimburse actual operating costs concerning 2.2 Transportation for business purposes within a preceding 12-month period. the employee’s private car without tax Legislation stipulates the following objective consequences. criteria for which kind of transportation is If the employee has a transport pattern considered transportation for business that implies transportation to so many The total annual number of kilometres If the employee has other expenses for e.g. purposes: different workplaces that it is not likely that driven in the income year referred to is bridge tolls, ferry tickets etc. in connection transportation between usual residence and decisive for whether the kilometres driven with transportation for business purposes, • Transportation between usual residence the workplace will occur for more than 60 justify the high or the low rate. the costs can, however, be covered by the and a workplace for up to 60 working days working days within a 12-month period, the employer as outlays according to receipts within the preceeding 12 months. transportation can be considered made for When the limit of 20,000 kilometres submitted. In order to have the expenses business purposes. There is no direct for business purposes in the individual • Transportation between workplaces. covered, it is a condition that the employee requirement to control that the rule has been calendar year is exceeded, the rate will be can show original receipts. • Transportation within the same complied with. The Danish Tax Agency can, reduced. If an employee has several workplace. however, with future effect for up to 12 employers at the same time or during the 2.1 Own car months, impose written orders that it should year, the 20,000 kilometre limit will apply to In order to obtain tax-free mileage allowance, it be documented that the transportation is each employer. This 60-day rule means that transportation is a condition that the employee drives in his/ actually business-related (e.g. by making will no longer be considered business-related her own car. mileage accounts). It is the actual number of kilometres driven when an employee has driven from his/her during the calendar year, which decides residence to a workplace for more than 60 “Own car” is a car that is registered in the 2.3 Tax-free mileage allowance which rate to be used. Thus the mileage working days within a period of 12 months. employee’s own name. A car that is leased in Both Danish and foreign employers and allowance must be calculated on the basis Therefore, the employee is no longer entitled one’s own name (private leasing) is also assignors can pay out tax-free mileage of the rates that applied on the date of the to a tax-free mileage allowance. considered one’s own car. A car that is allowance to the employee for transportation transportation – even though the actual registered in the spouse’s or the cohabitant’s in his/her own car for business purposes. payout will be made in the subsequent name is considered one’s own car as long as income year/calendar year.
6 | Company car / Own car If the employer pays out a tax-free mileage employer in connection with payout of tax-free The demand on employer control procedures 3. Leasing allowance by rates that are lower than the rates allowance. If concurrently with payout of means that the documentation must be If the employer leases a car and makes it stipulated by the National Assessment Council, allowance, the employer has agreed with the completed carefully and that it must contain all available to the employee as a company car, the the employee cannot deduct the differential employee to reduce his/her gross salary, show necessary information. employee will be tax liable according to the amount between the allowance and rates. salary restraint or receive a lower salary at his/ same rules applying for cars owned by the her employment, the allowance paid out will In our opinion, the conditions must be company. The calculation basis is determined If no allowance for transportation by one’s own be taxable. considered fulfilled, if the above items can be as if the car was purchased by the employer at car for business purposes is paid out, the identified through a salary/employee no. This the time of leasing the car. employee will instead be entitled to a tax 2.5 Documentation and bookkeeping means that, if the name, CPR-number, rates deduction (according to the rules and by the In order for the employee to receive a tax-free and calculation are stated on the payslip, and If the car is leased no more than 36 months rates for transportation between home and mileage allowance, the employer must check the information about date, purpose and after the car’s first registration, the car will be work). the number of kilometres driven. address etc. is registered in an IT system, the valued on the basis of the price of a new car. If documentation requirements are considered the leasing agreement has been concluded If an allowance is paid out by rates that are The allowance must be settled by submitting a fulfilled. more than 36 months after the car’s first higher than the National Assessment Council document containing information about: registration, an estimated market value of the rates, the entire amount will be taxable as The employer must check the number of car at the time of concluding the agreement will • The recipient’s name, address and personal income, unless the amount is divided kilometres driven effectively, and, therefore, be used as basis for the calculation. civil registration no. (CPR-number). at the time of payout and the part of the the person approving the payout must be able amount that exceeds the rates is treated as • The business purpose of the to identify the destination stated. Stating a 3.1 Low-taxed leasing cars salary. In this case, taxes should be withheld in transportation. company name or an in-house term is in Even though the rules of taxation of company connection with the payout. principal not enough. The exact address must cars are identical – irrespective whether • Date of the transportation. be stated. The voucher should be signed by the employer purchases or leases the car, 2.4 Set-offs • The objective of the transportation. the person checking them. it is, however, a fact that a car model with the Fixed monthly or annual payouts of mileage same equipment is often taxed lower, if it is • Number of kilometres driven. allowance are taxable and considered salary. 2.6 Reporting leased compared to a purchased car. This is Mileage allowance is also taxable, if it is set-off • Rates applied. Payout of tax-free mileage allowance must be solely due to the fact that the leasing compa- fully or partly against cash salary already reported, and the employer is liable to report nies (who own the car) can purchase the car at • Calculation of the mileage allowance. agreed upon. the amounts paid out on a month-by-month a lower price than the price at which an basis to eIncome in box 48 with seperately employer can purchase it. The tax exemption is conditioned by the income type, code 0109. employee not having compensated his/her
7| Company car / Own car In addition, the leasing companies have the Only leasing companies that lease out cars requirements of the wording of leasing the costs related to business driving, a possibility of only settling a proportional part commercially can apply the rule. Individuals agreements and mileage logs are fulfilled: detailed and complete mileage log must be of the registration duty for the period that the cannot use the rules. made continuously, and it must cover the Split leasing agreements leasing agreement covers. This does, actual kilometres driven split between however, not affect the taxation basis. 3.3 Split leasing • Separate, written leasing agreements between business and private purposes, respectively. Proportional calculation and settlement of the The model consists of two independent leasing the leasing company/employer and the registration duty are often referred to as flex agreements: leasing company/employee must be Split leasing in practice leasing, described in section 3.2 below. concluded. The leasing agreements must be The employer must in no way finance, be • One agreement between the leasing independent, and the parties must solely be liable for or guarantee the employee’s company and the employer, which covers liable for their own obligations in relation to the 3.2 Flex leasing obligations vis-à-vis the leasing company. working hours and transportation for leasing company. In everyday speech, flex leasing is the business purposes. situation where the leasing company has the • The employer has the preferential right to use In order for the scheme to be practicable and possibility of settling a proportional • One agreement between the leasing the car during working hours, and the at the same time comply with The Danish Tax registration duty. Very often, the model is company and the employee, which covers employee has preferential right to use the car Agency's terms and conditions, it is required described as continuous settlement of the spare time and transportation for private at other times (spare time). that each party settles all operational costs duty, however, this is not correct. purposes. (including costs for petrol) proportionally and • The lease payment and all operational costs directly with the leasing company. In this way, A very special rule makes it possible for The model is to ensure that the employer as well are for each of the parties settled directly with it is ensured that each individual scheme is the leasing companies only to settle a as the employee pays exactly each their part of the leasing company. divided effectively between the parties. proportional part of the total registration the total costs on the basis of a detailed mileage • The lease payment that covers the total duty. This is an exception from the ordinary log. operational costs, depreciation and interest Split leasing cannot be used for self-employed rules regarding payment of full registration payment is split proportionally between the businessmen, even though the Business Tax duty, when the car is registered in Denmark As the employee pays all costs and bears the parties on the basis of the actual kilometres Scheme is applied, since the self-employed for the first time. The registration duty is financial risk regarding all private transportation, driven. businessman is one and the same legal calculated in the usual way, and, the employer has not made the company car person. If a leased car that is used for mixed subsequently, the leasing company is charged available to the employee for private purposes. • The leasing agreements are required to be purposes is kept out of the Business Tax with a proportional part – equivalent to the Therefore, no taxation will occur according to the identical, so that each party pays exactly the Scheme, the actual costs for using the car for leasing period. The proportional duty is, general rules of taxation of company car. same amount per kilometre driven. business purposes can be refunded, and, however, paid upfront, and, therefore, the consequently, the model will in practice have payment is not continuous. The Danish Tax Agency has approved the Mileage log – split leasing the same effect as split leasing. scheme provided that the following In order to ensure that the employer only pays
8| Company car / Own car 4. Choice of company car scheme other hand, it can be an advantage for the • Petrol efficiency (how far does the car go per The choice between own car or company car employee to choose his/her own car, if a lot of litre). Our company car app can be usually attracts great attention. The basis for kilometres are driven for business purposes – downloaded free of charge from • Distance between home and work (for choosing company car or own car is primarily in particular if it is a low-price car – as the tax- www.deloitte.dk and is available for the calculation of lost mileage allowance, if any). the financial consequences for both the free mileage allowance rate is the same following platforms: employer and the employee. irrespective of the type of car that the • Transportation for private purposes. employee uses (new, used, lowprice or • Transportation for business purposes (for It is difficult to give a precise answer as to when expensive). calculation of the possibility of tax-free it is most financially advantageous for the allowance when using own car). parties to prefer the one model to the other, as 4.1 Free app to more platforms it depends on each individual situation. Deloitte has developed an easily accessible The conclusion summarises the most calculation model, which, on the basis of a few important assumptions and calculated For the employer, it is most often a decisive parameters, gives a very precise indication of amounts on which the calculations are based factor whether the costs are unchanged, which choice (company car or own car) is the in each situation. Android irrespective whether a company car is made financially most optimum solution in each available to the employee, or the employee situation. receives a higher salary combined with tax-free mileage allowance when using his/her own car Our model makes the calculation on an for business purposes. assumption that the total annual costs for a company car scheme is financed by an For the employee, it is important which solution equivalently lower salary, i.e. the choice iPhone/iPad is the most financially advantageous. This can between company car and own car is cost- be decided by making a calculation based on neutral for the employer. the price of the car, the mileage pattern and the time of the purchase etc. The calculations are based on the following individual information, which the user has Typically, the calculations will show that the to provide: employee should choose company car if the • The price of the car. number of kilometres driven for business PC Mac purposes is low compared to the number of • Calculation basis (which is most often lower kilometres driven for private purposes. On the than the price).
Offices in Denmark Aalborg Kolding Silkeborg Østre Havnepromenade 26, 4. sal Egtved Allé 4 Papirfabrikken 26 9000 Aalborg 6000 Kolding 8600 Silkeborg Tel. +45 98 79 60 00 Tel. +45 75 53 00 00 Tel. +45 89 20 70 00 email@example.com firstname.lastname@example.org email@example.com Aarhus København Nuuk City Tower Weidekampsgade 6 Imaneq 33, 6.-7. etage Værkmestergade 2, 18.-21. etage 2300 København S 3900 Nuuk 8000 Aarhus C Tel. +45 36 10 20 30 Tel. +299 32 15 11 Tel. +45 89 41 41 41 firstname.lastname@example.org email@example.com firstname.lastname@example.org Esbjerg Odense Dokken 8 Tværkajen 5 6700 Esbjerg 5100 Odense C Tel. +45 79 12 84 44 Tel. +45 63 14 66 00 email@example.com firstname.lastname@example.org
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