Taxation of employee’s cars

If you are an employee and have a car available from your employer that you can use for both business and private purposes, this “benefit” is considered as taxable income and added to your tax base in your monthly payroll. So far we have had only one rate how this monthly benefit has been calculated – 1% of the acquisition price (incl. VAT).

From 1 July 2022, an amendment to the Income Tax Act came into force. Newly for low-emission vehicles provided to employees by their employer for business and private purposes only 0.5% of the car acquisition price will be subject to tax every month.

A low-emission vehicle means a road vehicle of category M1, M2 or N1 which does not exceed the CO2 emission limit of 50 g/km and 80 % of the emission limits for air pollutants in real operation as laid down in the respective EU regulation.

Other cars that do not meet the above definition of a low-emission vehicle continue to be subject to monthly payroll withholdings from the 1% of the acquisition price.

This change will take place from payroll for July 2022 (calculated in most cases in the beginning of August 2022).