The recently approved Personal income tax regulations introduce a maximum reduction of 30% in the assignment of energy efficient vehicles by companies to their employees, for their private use.
With this new measure, the quantification of the employee’s fringe benefit is reduced, as well as the withholding tax applying on it.
✔Personal income tax regulations qualify as fringe benefit the assignment of vehicles by companies to their employees, for their private use.
Such fringe benefit is quantified in 20% of the annual cost of the vehicle, if it is owned by the employer; or, 20% of the vehicle’s market value, if it was new, if it is not owned by the employer.
The 20% is applied with no timing limit, even after the fifth year.
✔With effects in fiscal years starting as of Jan. 01, 2015, the fringe benefit valuation is reduced based on the vehicle’s characteristics, according to the following percentages:
- 30%, in the following vehicles’ categories:
- 20% when, in addition to the above requirements, vehicles are hybrid or they are powered by internal combustion engines that can use alternative fossil fuel (natural gas) providing that the vehicle’s market value, if it was new, before taxes, does not exceed 35,000 €.
- 15%, in the case of vehicles identified as Euro 6, whose official emissions of CO2 are not superior to 120 grams per kilometre and the vehicle’s market value, if it was new, before taxes, does not exceed 25,000 €:
a- Electric vehicles (battery electric vehicles or extended – range electric vehicles); or,
b-Plug- in hybrid electric vehicles, with minimum autonomy of 15 kilometres, providing that the vehicle’s market value, if it was new, before taxes, does not exceed 40,000 €.
✔This measure will not only benefit employees enjoying the fringe benefit but also employers that assume the withholding tax on such fringe benefit as a major wage cost.