E-Car Benefit-in-Kind Valuation from 1.1.2027#

For ecological reasons, different benefit-in-kind values were established for the private use of employer-owned motor vehicles. Based on this, the Benefit-in-Kind Values Ordinance (Sachbezugswerteverordnung) has since 2016 provided for a benefit-in-kind value of zero for vehicles with a CO₂ emission value of 0 g/km — i.e., purely electric vehicles. Employees who were previously allowed to use a company electric car privately therefore did not have to pay tax on any benefit-in-kind for it.

The following remains unchanged as the benefit-in-kind value for vehicles with combustion engines or hybrid drives:

• 2% of acquisition cost, max. €960 per month, for CO₂ emissions above the applicable threshold (2026: above 126 g/km WLTP)
• 1.5% of acquisition cost, max. €720 per month, for "ecological" cars and hybrid vehicles below this CO₂ threshold

     1. New Regulation from 1.1.2027
 

Alongside the government bill for the 2027–2028 Budget Accompanying Act, the draft for review of the amendment to the Benefit-in-Kind Values Ordinance was published on 10 June 2026. The 2027–2028 Budget Accompanying Act was passed by the National Council on 8 July 2026. The review period for the ordinance amendment ended on 21 June 2026. However, official promulgation is still pending.

Accordingly, the previously complete benefit-in-kind exemption for electric cars will be eliminated.

NEW: Going forward, private use of company electric cars will be staggered as follows:

The tax-relevant upper limit on acquisition cost for the new electric-car benefit-in-kind is €48,000 (gross, including VAT). The €48,000 upper limit for combustion-engine vehicles (including VAT and NoVA — the vehicle registration tax) remains unchanged. An evaluation of this rule by the Finance Minister is planned for 2030. No further adjustment is planned until then.

NOTE: The new benefit-in-kind rule is tied to the respective calendar month of use, not the registration date. An electric car registered in 2026 will be subject to the new benefit-in-kind rule from 1.1.2027 just the same as a new vehicle registered in 2027.
 

     2. Comparison: Electric Car vs. Combustion/Hybrid
 

The future burden from the benefit-in-kind can be summarized as follows:

An electric car remains clearly advantageous for tax purposes

An electric car remains clearly tax-favored even after the reform. Even the highest electric-car benefit-in-kind from 2028 (max. €300) is significantly below the benefit-in-kind for a comparable combustion vehicle (max. €960 or €720).

• For lower-priced electric cars (e.g., acquisition cost up to €48,000), the percentage increase has a proportionally stronger effect than for more expensive vehicles, because the cap only kicks in for pricier cars.
• In addition to the new benefit-in-kind, starting in 2027 a VAT-related "use-based own consumption" (Verwendungseigenverbrauch) — or, in the case of salary conversion, a transaction similar to a barter — must also be taken into account for the first time, because electric cars, unlike combustion vehicles, generally entitle the owner to deduct input VAT (see example below).
   

     3. Benefit-in-Kind under Salary Conversion (Gehaltsumwandlung)
 

Under a salary conversion arrangement, the employee forgoes part of their gross salary. In exchange, the employer provides a benefit in kind — here, private use of a company-owned electric car leased by the employer. Economically, the employee finances their "own" car through a reduction in gross salary instead of through their already-taxed net income. A tax advantage arises because, instead of full wage tax and social security contributions on the converted gross salary, only the (significantly lower) benefit-in-kind for the company car needs to be taxed.

If a company-owned electric car is provided under such a salary conversion arrangement, the new, reduced benefit-in-kind value is also intended to apply from 1.1.2027, according to the draft under review. The amount of the salary conversion itself has no bearing on the benefit-in-kind value. The benefit-in-kind value remains capped at the respective maximum amount.

Example:

Comparison between private leasing and employer leasing where the vehicle is made available for private use to the employee under identical conditions. Acquisition cost €40,000, lease payment €500 monthly (including VAT); term 60 months; gross salary €4,000; marginal tax rate 40%, marginal tax rate in retirement 30%.

How large would the gross salary reduction need to be?

The employer must cover both the net lease payment and the proportional VAT-related use-based own consumption (see below) out of the gross salary reduction. For a car with an acquisition cost of €40,000, the own consumption amount in 2027 is €25 per month, rising to €41.66 from 2028. The gross reduction is the net lease payment (€416.67) plus the own consumption (€25) = €441.67 (2028: €458.33).

How high is the benefit-in-kind for the electric car?

The benefit-in-kind is calculated on actual acquisition cost (€40,000) and capped at the respective maximum:

• Effect of salary conversion with electric-car benefit-in-kind compared to private leasing

If the employee leases their electric car privately, they pay the full gross lease payment of €500 out of their already-taxed net income. If instead they use a company electric car with input VAT deduction at the employer's level, funded through salary conversion, their actual economic burden is only the amount reduced by the tax and social-security savings as well as the pension shortfall (see the "actual total burden on employee" line). The lower this total burden compared to the €500 lease payment, the greater the advantage.

Conclusion: Even after the planned new regulation, a company electric car obtained through salary conversion generally remains significantly cheaper than privately financing a comparable vehicle out of already-taxed net income. The advantage decreases as the benefit-in-kind rises — from about 58% (currently) to about 41% (2027) and about 29% (from 2028) — but does not disappear. The exact advantage for the employee depends in each individual case on the vehicle price and marginal tax rate, as well as on whether the VAT-related use-based own consumption is passed on to the employee.
 

     4. Use-Based Own Consumption for Electric-Car Benefit-in-Kind
 

For businesses, the major advantage of electric cars over other cars — besides the elimination of NoVA — lies in the ability to deduct input VAT. For electric cars with acquisition costs up to €40,000 gross, the employer is generally entitled to the full input VAT deduction. Where acquisition costs are between €40,000 and €80,000, the input VAT deduction must be corrected via expense-based own consumption. If the electric car is made available to the employee for private use, this triggers a VAT-related use-based own consumption. The assessment basis for this is the income-tax benefit-in-kind value — this also applies in the case of salary conversion.

For combustion and hybrid vehicles, the question of use-based own consumption only arises in exceptional cases where an input VAT deduction is possible. In principle, no input VAT deduction is available for these vehicles.

NOTE: Whether the VAT-liable use-based own consumption can be passed on to the employee depends on the original salary conversion agreement. Existing salary conversion agreements should be reviewed — and adjusted if necessary — before 1.1.2027.

TIP: We recommend reviewing existing and planned company car policies and salary conversion agreements already in 2026 in light of the planned new regulation from 2027. Even after the planned reform, the tax-based ranking for vehicle selection remains: electric car, ahead of ecological combustion/hybrid vehicles, ahead of a "regular" combustion vehicle.

     5. Request for Submission of Documents

In order for us to correctly and promptly account for the new benefit-in-kind for each affected company electric vehicle in payroll accounting, we ask you to send us the following documents and information for every employer-owned electric vehicle made available to employees for private use (including vehicles already in the fleet):

• A copy of the vehicle registration certificate for each vehicle.
• The purchase or lease agreement showing the actual acquisition cost (including VAT and NoVA) or, if available, the list price at the time of first registration.
• Information on the vehicle's use:
  • Name of the employee benefiting from it and the start date of provision
  • Whether private use occurs (yes/no) and to what extent (e.g., mileage log, full private use, restricted use)
  • Any cost contributions by the employee (one-off and/or recurring), together with the underlying agreement
  • Any special equipment included in the acquisition cost

We kindly ask that you send us the above-mentioned documents by 30 September 2026 at the latest, so that the adjustment to payroll accounting for January 2027 can be prepared on time. For vehicles already provided, we ask that you send the documents as soon as possible, since — as explained above — the acquisition cost must already be reported separately on the 2026 wage certificate (Lohnzettel).

If you have any questions about this information, or need support in surveying your vehicle fleet or submitting the documents, our payroll team will be happy to assist — you can reach us via the contact details you already have.