Tax rules make it 'virtually impossible' to have a uniform fleet policy across Europe

Different tax regimes across different European countries make a uniform pan-European fleet policy virtually impossible, says a new taxation guide produced by Nexus Communications.

The 12th annual edition of the Taxation Guide says this picture of tax complexity across the EU is likely to continue, resulting in still more complex and inconsistent taxation of company cars.

This complexity is increased by the growing number of mobility alternatives increase this complexity, as companies' car policies shift more towards general mobility policies.

New technologies - such as those related to the ‘connected car’ - are often accompanied by a growing number of legal questions and uncertainties.

As a result, fleet policies need to be reviewed and adapted more and more frequently in order to keep pace with current legal and technological developments.

The guide, which looks at the changes that have been made by Governments in 23 European countries in the taxation of company vehicles during the past 12 months, also considers the ongoing impact of and fallout from ‘dieselgate’, and the fact that many companies face falling residual values for diesel vehicles.

The guide says it remains to be seen whether individual Governments will grant tax relief in one way or another to compensate for this disadvantage.

One option may be to introduce a special rate of depreciation and spread the effects over several years, said Dr Alexander Unfried, global automotive tax sector leader at report authors, PwC.

“However, diesel vehicles still remain a very good operational and cost effective solution for fleets, especially compared to electric vehicles,” he added.

The guide looks at the tax treatment of EVs in different countries, as many grant tax advantages for their purchase and maintenance; and in some countries it is possible to depreciate the additional price attributable to the battery of an EV separately from the vehicle cost.

However, the guide does not expect to see a rapid change in the make-up of vehicle fleets, as the infrastructure for charging batteries is not guaranteed region-wide and additional recharging stations need to be installed in company car parks and elsewhere.