Fringe benefits rules applicable for electric cars in the workplace from 2027

Created by Mag. Sylvia Unger |
Employment Law for Companies

The private use of a company car generally constitutes a monetary benefit that is taxable as a benefit in kind. Until now, fully electric vehicles provided by the employer have been subject to a full exemption. This exemption is now being restricted: from 1 January 2027, a benefit in kind will also apply to electric company cars. Companies should therefore prepare in good time for the changes to payroll accounting.

 

1. How much will the benefit payment be?

The amendment was made in the revised Section 4(1)(3) of the Regulation on the Value of Benefits in Kind (BGBl. II No. 272/2026):

  • For vehicles with CO₂ emissions of 0 grams per kilometre (= electric vehicles), a benefit in kind of 0.375 per cent of the actual purchase cost is to be applied from 2027. The maximum monthly amount is €180.
  • From 2028, the percentage will rise to 0.625 per cent, with the monthly benefit in kind capped at €300.
  • The calculation is based on the purchase cost, including VAT and NoVA tax.

Example: An employer (AG) provides their employee (AN) with an electric car with an acquisition cost of €40,000; the employee is permitted to use the car for private purposes without restriction. From 2027, the monthly benefit in kind will be €150; from 2028, €250.

By comparison, for combustion-engine vehicles, non-cash benefit rates range from 1.5% to 2%, depending on CO₂ emissions (Section 4(1)(1–2) of the Non-Cash Benefits Regulation). The significantly lower rates for electric vehicles are intended to maintain the tax incentive for electric company cars.

 

2. Are there still any subsidies?

If the company car is used for private purposes only to a limited extent and the verifiable average annual private mileage does not exceed 500 kilometres per month, only half the value of the benefit in kind is to be applied, in accordance with Section 4(2) of the Regulation on the Value of Benefits in Kind.

The new regulation also covers cases where employees exchange part of their gross salary for the provision of an electric vehicle. Here too, the reduced value of benefits in kind must be taken into account in future (Section 4(1)(3)(a) of the Regulation on the Value of Benefits in Kind). Special calculation rules also apply to so-called pool vehicles, which are used alternately by several employees (Section 4(6a) of the Regulation on the Value of Benefits in Kind).

 

3. From when must companies take this change into account?

The new provisions are to be applied for the first time to pay periods ending after 31 December 2026 (Section 8(13) of the Regulation on the Value of Non-Cash Benefits).

It is important to note that it does not matter when the electric vehicle was purchased. Consequently, existing company car arrangements are also affected, provided that the vehicles may continue to be used for private purposes.

 

4. What do employers need to do?

The full exemption from non-cash benefits for electric company cars will be a thing of the past from 2027 onwards. Whilst their use will continue to enjoy tax advantages, companies will in future have to take non-cash benefits into account in their payroll accounting. It is therefore advisable to review existing company car schemes and salary conversion agreements in good time.

 

About the author:

Ms Mag. Sylvia Unger has been an attorney for over 25 years and founded her own law firm, ‘Unger Rechtsanwälte’, in 2011.

Her practice focuses on employment law, company law, contract law and payment transactions law. She is the (co-)author of several specialist books, gives lectures on employment law, company law and payment transactions law, and advises companies across a wide range of sectors.