Rate for car value under 300,000 DKK:
| Until June 30, 2021 | From July 1, 2021 | 2022 | 2023 | 2024 | 2025 and beyond |
| 25 % | 24,5 % | 24 % | 23,5 % | 23 % | 22,5 % |
Rate for car value over 300,000 DKK:
| Until June 30, 2021 | From July 1, 2021 | 2022 | 2023 | 2024 | 2025 and beyond |
| 20 % | 20,5 % | 21 % | 21,5 % | 22 % | 22,5 % |
When calculating the taxable value, use the purchase price or new car price multiplied by the fixed rate mentioned above. The age of the car determines whether to use the purchase price or the new car price. However, the price is always at least 160,000 DKK.
The taxable value is also increased by an environmental surcharge (green ownership tax, which is dependent on the car's fuel consumption) corresponding to the following percentages of the annual ownership or weight tax for the car.
| Until June 30, 2021 | From July 1, 2021 | 2022 | 2023 | 2024 | 2025 and beyond |
| 150% | 250 % | 350 % | 450 % | 600 % | 700 % |
Driving between home and work is, as a general rule, private driving. When an employee has a company car, they can't claim a transportation deduction for driving between home and work. This applies even if the employee uses public transportation on some days, for example. Only the person with a company car is not eligible for the transportation deduction, so any driving between home and work by the spouse is eligible for the transportation deduction.
The calculation basis for new cars - including cars acquired by the employer no more than three years after first registration - is the new car price.
The new car price means the actual purchase price including registration tax, VAT, delivery costs and all normal factory-fitted accessories. Optional extras that are supplied and fitted by the dealer and shown separately on the invoice are not included in the basis for calculating the value of the free car. However, it is a prerequisite that this price corresponds to the price that an end user would have to pay at a dealer for the vehicle as new and thus the market value of the car between two independent parties.
The basis for calculation is the new car price for 36 months from the month of first registration.
After 36 months, the calculation basis is reduced to 75% of the new vehicle price (75% rule), but still at least DKK 160,000.
If the car is more than three years old at the time of purchase - calculated from the date of first registration - the basis for calculating the value of the free car is the employer's purchase price. If the car is repaired at the time of purchase or immediately thereafter, the cost of repairs must be added to the calculation basis.
The 75 percent rule does not apply to used cars that are more than three years old at the time of purchase, calculated from first registration. During the entire period of use, the value of the free car must be calculated on the basis of the purchase price plus repair and delivery, but always a minimum of DKK 160,000.
A company car can only switch from being taxed under new car rules to being taxed under used car rules if there is an actual change of ownership.
A transfer of the company car to a group company, for example as part of a restructuring, is considered to be a real change of ownership. If the car is more than three years old at the time of transfer, the future calculation basis for the value of the free car will be the car's market value at the time of transfer. The purchase of a company car at the end of a lease agreement is also considered a change of ownership. The same applies to a sale-and-leaseback arrangement. When establishing a sale-and-leaseback arrangement, the business transactions must be carried out effectively. This means, among other things, that the car must be re-registered and rent must be collected.
If an employer makes a leased company car available to an employee, the employee has until February 1, 2020 benefited from the fleet discounts that leasing companies could obtain, as the employer has been able to use the leasing company's purchase price as a tax base.
From February 1, 2020, the law has changed so that the leasing companies' recalculated basis for registration tax must be used as the tax base. The 75 percent rule also applies to leased cars.
If the employer chooses to buy the company car at the end of the lease agreement and the car is more than three years old from the first registration, the calculation basis for the value of the free car is the employer's purchase price (provided that this price otherwise reflects the actual market value of the car), even if the car is still used by the same employee.
Cars that are re-leased three full years after initial registration must be valued as an "old" car. As there is no invoice price, the market value of the car at the time of leasing should be used.
Taxation of free cars means that the employer can pay all expenses of an ordinary operational nature, i.e. insurance, road tax, petrol, repairs and maintenance, oil and washing etc. without further tax consequences for the employee.
If the employee pays some of these expenses with taxed funds, the taxable value of the free car is reduced. However, it is a requirement that the employee submits the invoices to the employer, who will expense the amounts as out-of-pocket expenses and recognize the same amount in the company car accounts as self-payment.
Expenses for parking, parking fines, ferry tickets, and highway and bridge tolls are not operational in nature and are therefore not included in the tax value of the free car. If the employer pays such expenses, the tax treatment depends on whether the expenses are incurred in connection with private or business driving. However, reimbursement of traffic and parking fines is always A-income for the employee, regardless of whether the fine is imposed in connection with business or private driving.
Ferry tickets, car train tickets and bridge tolls etc. in connection with private driving are private expenses that are taxable in case of reimbursement. However, the employee is not taxable on employer-paid bridge tolls when the bridge ticket etc. is only used for business and private driving between home and work.
The employer's payment of parking tickets or parking space at the workplace or in connection with business travel is tax-free for the employee
Read more in our publication: Employee benefits - Tax and VAT 2022
Or contact us by phone +45 3929 0800 or write to us at buusjensen@buusjensen.dk