Tax implications of company cars
- Angie Mecke
- Apr 14, 2021
- 3 min read
Updated: Apr 8, 2022
Employees who have a company car must pay tax on the private share as a non-cash benefit. This imputed income is intended to represent private journeys after work, at weekends and during vacations. The private share is calculated at 9.6 % of the vehicle price (excl. VAT) and reported in the salary certificate under position 2.2. In addition, the field F "free transport between home and place of work" is ticked.
Since the 2016 tax period, the adoption of the FABI bill (financing and expansion of the railroad infrastructure) has led, among other things, to a restriction of commuting expenses as business deductions. In addition, in the interests of equal treatment, the commute for owners of company cars is taxed as a non-cash benefit. Since the commuting expenses allowed as a deduction have been limited at the federal tax level as well as for most cantons, there is a possibility that additional income will be taxable as a result of this change.
Calculation example for federal taxes
If a company car is available to an employee and this employee travels 25 kilometers to work, the following calculation results under the assumption that this employee has no field service and home office:
Mileage rate: 70 Swiss cents
Working days: 240 days
Purchase price (excl. VAT): CHF 50'000
25 km x 2 x 0.70 x 240 = CHF 8'400
Less effective travel expenses ./. CHF 3'000
Non-cash benefit for the way to work (since 01.01.2016) CHF 5'400
Non-cash benefit for private use
9.6 % of CHF 50,000 CHF 4'800
Taxable non-cash benefit of the company car CHF 10'200
No additional tax burden (zero-sum game)
Depending on the number of working days (most cantons consider 220 or 240 days), only a commute of 9-10 kilometers does not lead to an additional tax burden. Due to the limitation of the commuting expenses, further distances lead to a higher tax burden at least on a federal tax level, since not the entire non-cash benefit for the commute can be deducted again.
Tax relief for owners of company cars
The imputed income for the commute to work is reduced by the portion of field service and home office days. Therefore, it is worthwhile to obtain a confirmation from the employer, which is also to be noted on the salary certificate (under item 15 "comments") and which confirms the share of the field service and home office.
Since the salary certificate is an official document from a tax point of view, the field service and home office days or the percentage share must be stated truthfully.
Changes as of 1 January 2022 at the federal level
The flat rate for calculating the private share for the use of company cars will be increased from 9.6 % (0.8 % per month) to 10.8 % (0.9 % per month) effective 1 January 2022. In return, the calculation of the non-cash benefit for the way to work in the tax return, which was introduced in 2016, will be waived in the future.
This adjustment will be adopted in the salary certificate guidelines of the Swiss Tax Conference, whereby this regulation will also apply at the cantonal level.
As a result of this adjustment, employers will no longer have to certify the days of field service on the salary certificate, which will lead to a considerable administrative simplification.
Advantages and disadvantages of the new regulation
In addition to reducing the administrative burden for employers, the additional tax burden for employees who have a longer commute and/ or a small proportion of field service or home office days will be reduced due to the flat-rate compensation for the commute.
For employees with a shorter commute and/ or a high proportion of field service and home office days, the new regulation will tend to result in an additional tax burden. This can be circumvented by the employees concerned keeping a logbook, on the basis of which the effective private use of the company car continues to be calculated.
