Company car taxes are continuing to rise across Europe as carbon dioxide thresholds continue to fall, with more countries than ever applying some form of CO2-based taxes on company cars, putting increased pressure on total cost of ownership (TCO).
So says the 10th edition of the annual Fleet Europe Taxation Guide, which has again been produced by Nexus Communication in conjunction with global accountancy firm PwC and sponsored by Opel/Vauxhall and Volkswagen Financial Services.
Taxes – and especially tax benefits – have become key drivers of fleet management and car fleet policies across Europe. “That’s likely to continue as taxation directly impacts on the cost of corporate fleets and the benefits packages of company car drivers,” said Fleet Europe editor-in-chief, Steven Schoefs.
“Over 20 European countries apply some form of CO2 tax on company cars, and that trend will accelerate – driven in no small measure by ‘Dieselgate’ and related emissions issues.
“Mirroring that trend, tax incentives for hybrids, full electric and hydrogen cars are likely to be deepened and widened across more countries. So corporate fleets will both be pushed and pulled towards lower-emission and/or alternative powertrain vehicles.
“More than ever, corporate fleets can use taxes and tax benefits to shape the TCO of their fleet to their advantage.”
This year’s 10th anniversary guide highlights the fact that CO2-inspired company car taxes are increasingly commonplace across Europe and that CO2 emission bands are being squeezed downwards – while taxes are going up. In the UK, for example, benefit-in-kind tax on company cars is set to rise by 9% over the next four years.
Meanwhile, taxes unrelated to CO2 or sustainability – such as VAT on new vehicles and fiscal penalties for private use of company cars – are also increasing in many countries, leading to a further rise in TCO.
Combined with other rising costs such as insurance, this can easily push up fleet TCO by 12% and more, thus increasing pressure on fleet managers to keep costs under closer control. As a result, fleet buying behaviour is pushed towards CO2-friendlier cars, making CO2 emissions and sustainability crucial elements of any fleet strategy that seeks to avoid unnecessary costs.
Meanwhile, many European countries have introduced tax incentives for EVs to try and stimulate sales, ranging from buying subsidies, special allowances for company purchases, and exemption or partial exemption from road taxes or congestion charges.
The upshot for fleet managers, says the report, is that you can minimise your tax bill by choosing more fuel-efficient vehicles or investigating alternative powertrains. In other words, the ‘cleaner’ the vehicle, i.e. the less CO2 it emits, the less tax there is to pay.
Unfortunately, depending on the country, the complexity of vehicle taxation is increasing at the same time. International fleet managers might be faced with any combination of vehicle registration tax, road tax, VAT on new vehicles, CO2-linked contributions, fiscal penalties for private use of company cars, congestion charges, benefit-in-kind income tax – and many more depending on the country.
Understanding car taxation across Europe, therefore, is crucial for strategic fleet decisions at a pan European level, and the 10th Guide seeks to make it easier for fleet managers to comprehend the complexities of the company tax situation in 23 different European countries.
A useful new section, first introduced last year, again includes an overview of the main changes that have been implemented in each country compared to 2015. For example, in the latest edition, this shows that France has seen the introduction for a new bonus system for supplemental tax on CO2-efficient new car purchases, while in Portugal there have been changes to both vehicle registration tax and annual vehicle tax.
The 23 countries covered in the printed version of the 2016 Taxation Guide are: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Russia, Spain, Sweden, Switzerland, Turkey and the United Kingdom.
The digital version expands this to 28, with those from the printed version plus Estonia, Latvia, Lithuania, Slovakia and Slovenia.
For more information on the guide, click here.
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