Company Car

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What is a company car?

A company car is a car or vehicle provided by your employer. The car is used in connection with your work and can be any car your employer pays for.

You can automatically register company driving with Acubiz

Track company driving in real-time via integration with Google Maps or manually enter your driving from your phone.

Company cars have special license plates to distinguish them from regular license plates. This is to make it easy to differentiate between a company car and a private car because there are different rules for their use.

What about company car taxation?

If you are offered a company car, there are several rules you need to be aware of. We will go through them now.

Taxation of company cars

If you are offered a company car, you do not have to pay for it yourself, even though you are the one who will be using it.

However, the company car’s taxable value is added to your gross salary, meaning you pay for using the car through your tax collection.

Taxation of company cars is done so that your salary is increased to the benefit you obtain by having the vehicle at your disposal. You, therefore, pay more in tax when you have a company car because the benefit is reflected in your tax.

Taxation in connection with private use

If you are allowed to use the company car for private purposes, it is called a “free car.”

If you drive a free car, you must pay tax on a percentage of the car’s total value. As a starting point, the tax is calculated based on the car’s value but is set from a minimum value of DKK 160,000 – even if the car is worth less.

In addition to the DKK 160,000, you must also pay 25%, plus an environmental supplement that equals 15% of the annual road tax:

  • If the car’s value is up to DKK 300,000, you must pay tax on 25% of the value + an environmental supplement.
  • If the car’s value exceeds DKK 300,000, you must pay tax on 25% of the first DKK 300,000 and 20% of the remaining value + an environmental supplement.

 

Here are other things to be aware of:

  • If you pay your employer to use the car, you can deduct the gross amount from the amount you must pay in tax.
  • If you have a company car available that you can also use for private use (i.e., a “free car”), you are no longer entitled to mileage reimbursement or mileage deduction.
  • You can pay for the company car with a fixed monthly or annual amount.

It varies who is responsible for paying for fuel

As a starting point, you are responsible for paying for fuel, but it depends on whether the car is owned solely by the employer or jointly by you both.

If the employer solely owns the car, and you only use it for work, the employer should pay for fuel – either with a fuel card or you make an outlay and get reimbursed later.

If you own the car jointly with your employer, it is up to you to pay for fuel.

Do you want to know more?

If you’re missing an accurate mileage log for company and pool cars, consider an automatic and digital mileage log that ensures accurate calculations.

Contact us if you want to know how we can help your business or book a free online demo to learn more.

FAQ

How much does it cost to have a company car?
The cost of having a company car varies and depends on factors such as the car’s price, annual mileage, and fuel economy. However, a rule of thumb states that 1 percent of the car’s taxable value is what the car costs you after monthly taxes.
You do not have to pay for a company car yourself. Instead, a taxable basis is added to your gross salary, and you pay for using the car through your tax payment. The amount you drive the car does not affect the tax.
You must pay tax on a percentage of the car’s total value. The calculation is based on the value of the car: if the car’s value is up to 300,000 kroner, you have to pay 25% of the value plus an environmental surcharge; if the car’s value is over 300,000 kroner, you have to pay the environmental surcharge in addition to 25% of the first 300,000 kroner and 20% of the remaining value.

If you use the car for business purposes, only you are allowed to drive the company car. However, if you have a company car available for private use, other household members are allowed to drive the car. You are not entitled to mileage reimbursement if the company car is available for private use.

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