Planned Increase in the Taxation of Benefits in Kind for Electric Company Cars

Taxation of Benefits in Kind for Electric Company Cars

Under the measures currently proposed by the Austrian Ministry of Finance, employees who are allowed to use an electric company car for private purposes will, in the future, also be subject to taxation on a benefit in kind. However, the environmental incentives associated with electric mobility are intended to remain in place through a reduced benefit-in-kind value compared to conventional company cars. For 2027, only a moderate initial increase is planned.

To date, electric company vehicles with private-use privileges have enjoyed particularly favourable tax treatment. For vehicles with zero CO₂ emissions, the taxable benefit in kind is currently set at zero, meaning that employees do not incur wage tax or social security contributions in relation to the private use of the vehicle.

Taxable Benefit in Kind

As part of the 2027–2028 Budget Package, the Austrian government plans to revise this regime. Under the proposed rules, a taxable benefit in kind will also apply to electric company cars and will be introduced as follows:

• 2027: A benefit in kind of 0.375% of the vehicle’s acquisition cost (including VAT and registration tax) per month, capped at EUR 180 per month.
• From 2028 onwards: A benefit in kind of 0.625% of the vehicle’s acquisition cost (including VAT and registration tax) per month, capped at EUR 300 per month.

Where a benefit in kind must be recognised, VAT will generally also apply if the employer was entitled to a full or partial input VAT deduction on the vehicle. In such cases, the calculated benefit-in-kind value will serve as the gross VAT assessment base.

The proposed changes are expected to take effect from January 2027 and will apply to all employer-provided vehicles with zero CO₂ emissions that are made available for private use.

Conclusion

While electric company cars are expected to lose part of their current tax advantages from 2027 onwards, they will continue to enjoy preferential treatment compared with vehicles powered by internal combustion engines.

The proposed benefit in kind remains substantially lower than that applicable to conventional company cars, which currently amounts to 1.5% or 2% of the actual acquisition costs, including VAT and registration tax, depending on the vehicle’s CO₂ emissions. The monthly benefit is capped at EUR 720 or EUR 960, respectively.

It should be noted that the Benefits-in-Kind Valuation Regulation (Sachbezugswerteverordnung), which is relevant for the implementation of these rules, has not yet been amended to reflect the proposed changes. It therefore remains to be seen how the final wording of the regulation will be drafted.