When is a use of a company car considered as a benefit?
Benefits for using a company car are charged when an employer provides an employee use of a vehicle also for personal purposes. (driving to work and home counts as such)
Income tax act
Use of a company vehicle for personal purposes is seen as a benefit, which is handled in 39th and 43rd article of Income tax act (ZDoh-2). Benefit is every privilege in form of a product, service or other privilege in nature, which employee or family member gets to use from employer or other person regarding the employment.
Admitance of costs for using a company vehicle in conformity with the income tax act:
Income tax of entity act (ZDDPO-2) in article 30 lists costs as non tax deductible, those are the ones that are applied to personal life, fun, breaks, sport and recreation , including the value-added tax. Among these are:
- Costs, which are applied to personal life of owners or related persons from article 16 and 17 of Income tax act, including costs of assets in possession or leased by person relating to personal life of these people.
- Costs, which are applied to personal life of other people, including the costs of assets in possession or leased by person relating to personal life of these people, except for the costs for assuring benefits or other payments related to employment, if taxed by income tax act.
Simply put, if an employee uses a vehicle exclusively for business purposes, benefits are not needed, but if an employer provides a vehicle for employee to ride from home to work and back, then it is seen as a benefit, because it is a privilege that other employees do not have. Order of cost payments clearly states: reimbursement of costs for transportations are applied to use of public transportations, if this is not possible, then they are applied to employees personal vehicle, use of a company vehicle is only allowed for business trips and transportation from home to work and back is not a business trip. Benefit is not needed if vehicle is only used for business trips and stays in the parking lot of the company after working hours. In your case benefits are needed to be calculated.
Obligatory record of distance – travel orders
By order of reimbursements and the income tax act you are obligated to keep records of mileage for company vehicles by the meter reading. Additional form is in attachment, it is made in excel and has a separate form for each month. Fill the form each month.