Electric vehicles are taking up an increasing share of company fleets – not only due to environmental benefits but also because of lower operating costs. Incorporating the company car into the corporate employee benefit system can be an effective incentive, even for executives and key employees.
In recent times, there have been significant changes regarding the taxes levied on company cars, as a result of which the amount of company car tax has gradually increased. As of this year, plug-in hybrids and extended-range hybrids have, as a general rule, lost their exemption from company car tax, motor vehicle tax, registration tax, and duties.
However, alongside these major changes, the treatment of personal income tax, corporate income tax, and VAT has remained unchanged: from a personal income tax perspective, both corporate and private use are tax-free, related costs can be deducted for corporate income tax purposes, and in certain cases, favourable VAT rules can also be applied.
In our article below, however, we do not address company car taxation in general but focus on a very specific and practically significant question: employer support for home charging of electric vehicles. How can the cost of electricity used in such cases be legally and tax-compliantly accounted for?
The method of accounting has a direct impact on tax payment and reporting obligations.
Separate meter – the most transparent accounting
If a separate meter or sub-meter is installed at the employee’s home, dedicated exclusively to charging the company car, the electricity consumption can be precisely separated.
This is important because:
- the cost can be clearly substantiated,
- the employee does not generate taxable income, since they are not receiving money for private use but are being reimbursed for actual corporate expenses.
Installing a separate meter involves a one-time, significant initial cost, which, however, may pay off in the long run by simplifying bookkeeping and making taxation transparent.
If there is no separate meter, the smart charging mode can be used
Many modern chargers have software that can record the consumption of individual users separately and in a verifiable way. If there is no sub-meter, the built-in meter of the charging equipment can also be used; many modern chargers already have their own meter. In this way, the smart charger itself can measure how many kWh of electricity were used to charge the company car. Based on this, using the unit price from the electricity supplier’s invoice issued in the name of the employee (or their spouse), the cost can be accurately calculated.
The company may reimburse the determined amount. Depending on whether it concerns business or private use, the reimbursed amount qualifies either as expense reimbursement provided in relation to employment or as salary. In the case of business trips, the cost can be accounted for on an itemised basis, meaning that taxable income does not necessarily arise, although the reporting obligation still applies in such cases.
Flat-rate cost? – Not always an option for company cars
Due to the administrative burden of itemised cost accounting, it may arise that a fixed flat-rate amount (so-called standard cost) would be simpler, as many do for the use of private cars.
However, according to the Personal Income Tax Act, the trip order and the “fuel price” accounting method published by the Hungarian Tax Authority (NAV) only apply to privately owned vehicles (or vehicles owned by close relatives). According to the official position of the NAV, they do not apply to company cars.
Whether it involves a separate meter, a smart charger, a trip order, or a mileage log, costs can in all cases be accounted for properly based on measurable data and organised documentation.
In our article, we presented how to account for electricity costs used for charging company cars in a legally compliant and tax-correct manner. If you have any further questions regarding the above, the tax advisory team at WTS Klient is at your disposal.
This article provides general information and does not constitute advice.
