Up to now, the special allowance was calculated on the basis of the kilometres driven, and it was possible to avoid paying the special allowance tax by paying the costs of using a company car. However, from 2018, this possibility will disappear. The amount of the tax will depend on the power of the car’s engine and it will no longer matter how much
the car is used for private purposes and whether or not the user reimburses this private use.
As of 01.01.2018, the new amended wording of paragraph 48(8) of the Income Tax Act (TuMS) reads as follows: ‘When a passenger car owned or held by an employer is used for work, official or service purposes or for the employer’s non-business activities, the price of the special benefit is 1.96 euros per unit of engine power (kW) per month as stated in the registration of the passenger car.’. In the case of a passenger car over five years old, the price of the special incentive shall be EUR 1,47 per unit of engine power (kW) of the passenger car. The special advantage does not arise in the taxable period if the passenger car has been temporarily deleted from the road register or the registration has been suspended.”
In this context, the requirement to use a logbook will also be abolished, as the number of vehicle kilometres will no longer be relevant. The amount of the special tax credit will depend only on the engine power of the car.
For example, if the engine power of a car is 100 kW, the income tax base for the price of the special incentive will be 100 kW * €1.96 = €196 from 2018. The income tax on the special allowance is 196*20/80 = €49, the social tax is €80,85.
If the company car is used only for business purposes, the Road Administration must be informed, and the Road Administration will make an entry in the vehicle’s road register indicating that the car is used only for business, official or service purposes. There is no charge for making the corresponding entry in the traffic register.
If there is no such entry in the road register, it is assumed that the passenger car is also used for private purposes and the private income tax and social security tax should be paid on this passenger car, with a tax base of €1.96 or €1.47 per kW of engine power, regardless of the size of the private use.
In addition, as of 01.07.2017, there is already a legal provision (Section 48(51) of the Tax Code) which allows employees whose distance between their place of work and their place of residence is more than 50 kilometres to travel from work to home and vice versa without this being considered a special benefit. Under the same provision, the employer is allowed to organise the transport of employees in a vehicle or bus of at least 8 seats free of special allowance.
