Dear Clients,
Many companies provide employees with a company car that may also be used privately. The tax treatment is complex for both the employer and the employee, making this topic a popular “playground” for auditors from the tax authorities and social insurance institutions.
Cars with Combustion Engines or Hybrid Engines
Combustion or hybrid vehicles continue to be popular as company cars; however, unlike fully electric cars, they offer virtually no tax advantages:
- There is no right to deduct input VAT.
- The motor-related insurance tax is calculated based on kilowatt output and CO₂ emissions.
- The standard fuel consumption tax (NoVA) must be paid upon first registration, with rates increasing annually due to lower allowable CO₂ thresholds.
- No investment allowance is available for these vehicles, as they produce CO₂ emissions.
Calculation of the Benefit in Kind for Private Use
A benefit in kind must be applied in payroll accounting when a company car is also used privately. This means that the employee’s net income is reduced due to the taxation of this benefit.
- The benefit in kind is calculated as: 2% of the vehicle’s acquisition cost including VAT and NoVA, capped at EUR 960 per month.
- If the vehicle’s CO₂ emissions are 141 grams per kilometer or less (value from 2020, reduced annually by 3 g/km), then only 1.5% must be applied, capped at EUR 720 per month.
Fully Electric Vehicles
Fully electric cars with zero CO₂ emissions are the tax-advantaged vehicle category.
- Input VAT can be fully deducted for acquisition costs up to EUR 40,000 gross (appropriateness threshold). For costs between EUR 40,000 and EUR 80,000, the deductible portion decreases proportionally. Above EUR 80,000, the deduction is eliminated entirely.
- The investment allowance (IFB) may be claimed for electric vehicles; for 2026, it is 22% instead of 15%.
- Exemption from the standard fuel consumption tax (NoVA).
Benefit in Kind for Electric Cars
Employees do not incur any benefit in kind when provided with a fully electric company car.
For home charging, the following applies: Starting in 2026, the amount of electricity charged must be precisely documented (e.g., via a smart wallbox) to claim a tax-free reimbursement (subject to a capped reimbursement rate).
The purchase or co-financing of a home charging station (e.g., wallbox) is not considered a taxable benefit up to an amount of EUR 2,000.
If you have any questions regarding this extensive and complex subject area, please feel free to contact us. We are happy to assist you.
Best regards
Vienna, April 2026
