As of 1 July 2021, new rules have been adopted for the calculation of taxation of company cars. The new rules apply to all company car schemes – including those entered into before the legislation was passed.
There is no doubt that for the next five years, the country’s payroll offices will be busy keeping an eye on the new rules and rates. In this post we will run through the new rules.
The new rules are part of the political agreement on the green transition. The agreement also includes a reduction in taxation for electric cars and plug-in hybrid cars.
As can be seen below, there will be a gradual phasing out of the break in the tax calculation for cars with a value of resp. above and below DKK 300,000. This means that from 1 January 2025, the same percentage must be used regardless of the value of the car. The new rates are shown in the table at the bottom of the post.
The environmental surcharge (the old motor vehicle tax), which is added to the taxable value of a company car, will also be raised from 1 July 2021 onwards. See more in the table.
Electric cars and charging stations
As of 1 July 2021, charging stations at residences which are paid for by employers must no longer be included in the tax base for a company car, if the employee has a company car which is an electric car or a plug-in hybrid car.
As of 1 July 2021, tax exemptions have also been introduced for charging stations at private residences which are paid for by employers, which will be transferred to exclusively private use when the employee has been taxed on an electric or plug-in hybrid company car for a continuous period of at least six months.
Tax rate and environmental surcharge
|
|
1/1–30/6 |
1/7–31/12 2021 |
1/1–31/12 2022 |
1/1–31/12 2023 |
1/1–31/12 2024 |
1/1–31/12 2025 |
|
Rate for cars with a value below DKK 300,000. |
25.0% |
24.5% |
24.0% |
23.5% |
23.0% |
22.5% |
|
Rate for cars with a value over DKK 300,000. |
20.0% |
20.5% |
21.0 % |
21.5% |
22.0% |
22.5% |
|
Environmental surcharge* |
1.5 |
2.5 |
3.5 |
4.5 |
6.0 |
7.0 |
*The environmental surcharge is added to the taxable value of a company car, corresponding to the green tax multiplied by the above factor.
NOTE! Pay extra attention to July salaries!
Please note that the reduction and increase of the rates to resp. 24.5% and 20.5% come into effect from 1 July 2021. The change affects cars registered before this date. This means that in connection with July salaries, recalculations of the company car tax basis must be made for a large number of company cars.
Calculation basis – no change
The calculation basis for the first 36 months from the first date of registration is still the car’s new car price. Thereafter, the calculation basis drops to 75%. For cars acquired min. 36 months after the first date of registration, the actual purchase price forms the basis for the calculation.
Example of what the new rules mean compared to the old rules:
- Brand new company car, tax base: DKK 400,000
- Annual environmental surcharge (motor vehicle tax) of DKK 3,020
- Calculation year: 2022
|
|
Amount, NEW rules |
Amount, OLD rules |
|
24% value up to DKK 300,000 |
72,000 |
75,000 |
|
21% of value over DKK 300,000, i.e. DKK 100,000 |
21,000 |
20,000 |
|
Environmental surcharge, 3.5 * 3020 |
10,570 |
4,530 |
|
Total taxation |
103,370 |
99,530 |
|
Taxation per month |
8,630 |
8,294 |
Need guidance?
If you have questions about the new rules or general questions about taxation, you are welcome to contact us so that we can discuss your challenges and opportunities.
