The consolidation package, which has already been signed by the President of the Republic and is awaiting publication in the Collection of Laws, brings many changes. One of them is the amendment to Act No. 586/1992 Coll., on income taxes, which, among other things, regulates the free provision of a motor vehicle for business and private purposes. What exactly will change as of 1 January 2024?
Free provision of a company car - changes from 1 January 2024
If the employer provides the employee with a motor vehicle free of charge for business and private purposes, the employee's income is considered to be the amount of at a specified percentage. For these purposes, the specified percentage shall be deemed to be:
- 0,25 %, if it is emission-free vehicle
- 0,5 %, if it is low-emission vehicle
- 1 %, if it is a road motor vehicle which is not a low-emission or zero-emission vehicle.
Currently, the employee's taxable income is 1 % of the entry price of the vehicle if the employee uses a vehicle that is not a low emission vehicle for business and private purposes and 0.5 % of the entry price of the vehicle if the employee uses a low emission vehicle.
However, from 1 January 2024, a third category will be added and from that date onwards, the employee's taxable income will be 0.25 % of the entry price of the vehicle when using an emission-free vehicle for business and private purposes.
What is a low and zero emission vehicle?
Amendment to the Act No. 586/1992 Coll., on income taxes brought about by the consolidation package, paragraphs 6) and 7) are added to Section 21(b) to define what constitutes a low-emission and zero-emission vehicle.
Low-emission vehicle is for income tax purposes a road motor vehicle that is a low-emission vehicle under the law governing the promotion of low-emission vehicles through public procurement and public passenger transport services and is not emission-free.
Emission-free vehicle means, for income tax purposes, a road motor vehicle that uses only electricity or hydrogen as fuel, or another road motor vehicle whose operation has no CO2 emissions.
What amount is the employee's taxable income?
A specified percentage of the entry price of the vehicle the employee's taxable income for each month of use of the vehicle for business and private purposes regardless of whether it was actually used in the month in question.
If the vehicle used by the employee for business or private purposes is hired or acquired on finance lease, the entry price of the vehicle with the original owner is used, even if the vehicle is subsequently purchased. If the entry price of the vehicle does not include value added tax, the entry price of the vehicle shall be increased by the value added tax for the purpose of including a specified percentage of the entry price of the vehicle.
If the amount assessed as taxable income of the employee for the provision of the vehicle is less than CZK 1,000, the employee's taxable income is CZK 1,000.
If the employer provides the employee free of charge during the calendar month more motor vehicles behind for business and private purposes, is taxable income Staff an amount equal to a specified percentage of the highest entry price of the vehicle.
If the employer provides the employee with free of charge during the calendar month multiple motor vehicles at the same time for business and private purposes, then is taxable income Staff the aggregate of the amounts corresponding to a specified percentage of the entry price of each simultaneously provided vehicles.
