TaxWatch:

Company cars: An overview over the many new rules

29 March 2021

Tanya Honoré Schultz, Director, Tax Legal |

For the next five years the tax base of company cars will have to be adjusted annually, and in some years even multiple times. This is the consequence of the political agreement about new car taxes.

Although most politicians claim that they are focused on reducing the administrative burden for Danish companies, the new car agreement does not reduce the administrative work. It will most likely have the opposite effect.
 

Consequences of the new car agreement

The political agreement regarding “green conversion of road transport” has the following consequences for company cars:

  • The registration fee will to a greater extent be based on the cars’ CO2 emissions, which affects the new-car valuation and, thus, the tax base.
  • The reduction of the tax base of company cars with a new-car valuation of above 300.00 DKK will be no longer apply. In the future, the tax base will be calculated as 22.5 % of the car’s new-car valuation.
  • The motor vehicle tax will not only increase dramatically but will also carry a substantial weight in relation to the tax base of company cars.
  • The value of charging stations provided by the employer at the employees’ private address will no longer be a part of the tax base of electric cars.

In conclusion, the users of electric cars or plug-in hybrid cars will benefit from the new rules, while it will be much more burdensome for the users of conventional car.