Where companies provide company vehicles for their directors or employees, Benefit-in-Kind (BIK) applies on the cash equivalent of the employee’s private use of the company vehicle. Currently, BIK is calculated based on the vehicle’s original market value however from 1 January 2023, CO2 emissions and business mileage will also be taken into account.
For vans, the current BIK cash-equivalent rate of 5% is due to increase to 8% from 1 January 2023. For cars, the rate can be as much as 30%. Note that even if a vehicle is considered commercial for road tax purposes, Revenue may view it as a car for BIK purposes.
A recent appeal court decision on commercial vehicles has held that a Land Rover Discover with seats behind the driver seat was a commercial vehicle.
Under an incentive to encourage greater take-up of electric vehicles, currently, battery electric vehicles (BEVs) qualify for a 0% BIK rate if their cash-equivalent original market value is below €50,000—thereafter, the 30% rate applies. This incentive will taper off from January 2023 with the original market value being reduced by €35,000 for 2023, €20,000 for 2024, and €10,000 for 2025.
Tax Appeal on what is a commercial vehicle
If your company has Land Rovers, note that the Tax Appeals Commission recently ruled that the Land Rover Discovery 4 is a car for BIK purposes. This has implications for crew-cab vehicles and vehicles classified as business models. If you are planning to purchase a new vehicle, contact your local ifac office for advice.
Accelerated Capital Allowances
Up the end of 2024, businesses can claim 100% Accelerated Capital Allowances (ACA) for investments in energy efficient products and equipment, including electric vehicles and associated EV charging equipment.
Where an employee uses a personally owned vehicle for business purposes, you can repay their mileage expenses tax free at Revenue approved rates provided that you maintain the necessary records. Contact your local ifac office for details.
If your employees are required to travel for work, you can pay their subsistence costs tax free subject to certain conditions. The rate of payment should be at or below the current Civil Service subsistence rate. As of 1 September 2022 the normal domestic overnight rate is €167, the reduced rate is €150.30 and the detention rate is €83.50.Overnight allowances cover an overnight assignment of up to 24 hours and must be at least 100km from the employee's home and their normal place of work.