Business car for private purposes

The amount of in-kind benefit is set based on the acquisition price of the car (eventually increased by technical improvement of the car) and amortization of a car.

This in-kind benefit is considered as an employee’s taxable income during eight consecutive calendar years from the beginning of car put into use in the amount of 1%:

• In first year, the value is calculated from the acquisition price of the car;
• In following seven years the value is calculated based on acquisition price of the car decreased by 12.5 % for each calendar year.

The employee’s income tax is applied for each calendar month during which the employee has a right to use the vehicle for private purposes. It is not decisive whether the car was used for private purposes in a given month. These provisions on taxation are relevant with respect to employer's own car as well as the rented one.

The costs related to the use of the car by the employee for private purposes are tax deductible expense in the amount of 100% for the employer if the use of the vehicle is agreed with the employee in an employment or other similar agreement and is subject to income tax on the employee‘s side under the conditions mentioned above.

The provision of car for private purposes is not subject to employee’s income tax after the period of eight years is lapsed. In such case, the employer will include the expenses related to the usage of company’s car for private purposes in the tax-deductible expenses in an actual demonstrable amount corresponding to the usage of vehicle for business purposes or in the form of lump-sum expenses of 80% of total car related costs.