New Tax Rules for Electric Company Cars from 2027

Electric company cars in Austria have so far benefited from particularly favourable tax treatment. Where a fully electric company car is also available for private use, no taxable benefit in kind (Sachbezug) currently arises. This has made electric vehicles considerably more attractive than conventional company cars with combustion engines.

As part of Austria’s budget planning for 2027 and 2028, however, this preferential treatment is set to change.

The current full exemption from the taxable benefit in kind for zero-emission company vehicles is expected to be gradually phased out. Similar to the rules already applicable to combustion-engine vehicles, the calculation will be subject to a maximum acquisition cost. This threshold currently amounts to EUR 48,000, including VAT and the Austrian standard consumption tax (Normverbrauchsabgabe – NoVA).

The following taxable benefit rates are planned:

• from 2027: 0.375% of the vehicle’s acquisition cost, capped at EUR 180 per month

• from 2028: 0.625% of the vehicle’s acquisition cost, capped at EUR 300 per month

Based on the current proposal, there will be no grandfathering based on the vehicle’s acquisition date. The new taxable benefit would therefore apply from 1 January 2027 to all zero-emission company vehicles provided to employees, irrespective of whether they were acquired recently or have already been in use for several years.

A reduced taxable benefit of 50% may apply where it can be demonstrated that the vehicle is driven no more than 500 km per month. It remains to be seen what evidence the Austrian tax authorities will require for this purpose. In particular, it is currently unclear whether a simple mileage record will be sufficient or whether electric vehicles will also require a detailed logbook (Fahrtenbuch) going forward.

VAT implications

For Austrian VAT purposes, fully electric passenger cars are treated differently from conventional passenger cars with combustion or hybrid engines. Subject to certain conditions, input VAT may be deductible when an electric passenger car is purchased or leased.

For electric passenger cars with gross acquisition costs of up to EUR 80,000, an input VAT deduction may generally be available. However, where the acquisition costs exceed the income tax “luxury car threshold” (Luxustangente), currently EUR 40,000, an adjustment is required by way of a deemed private use of expenses (Aufwandseigenverbrauch). From an economic perspective, the input VAT deduction therefore generally remains limited to the proportion attributable to acquisition costs up to the EUR 40,000 threshold. In practice, businesses typically claim only the corresponding proportion of input VAT.

Where an employer purchases or leases an electric passenger car, a full or partial input VAT deduction may therefore be available. If the vehicle is subsequently made available to an employee as a company car, its private use generally constitutes a deemed supply (Verwendungseigenverbrauch) for VAT purposes and is, in principle, subject to VAT.

The taxable amount is determined by reference to the values used for calculating the taxable benefit in kind for income tax purposes. Importantly, the taxable benefit amount is treated as a gross amount. As the taxable benefit for electric passenger cars has so far been EUR 0, no VAT liability in respect of the employee’s private use has generally arisen in practice.

This could change from 2027.

If the Austrian tax authorities maintain their current approach and continue to use the payroll tax benefit-in-kind value as the basis for VAT purposes, the new taxable benefit amount is also likely to become relevant when determining VAT on the private use of electric company cars. Further developments should therefore be closely monitored, particularly any guidance or clarification issued by the Austrian Federal Ministry of Finance (Bundesministerium für Finanzen – BMF).

Salary conversion arrangements and electric company cars

Electric company cars are increasingly being offered as part of salary conversion arrangements (Gehaltsumwandlung). Under such arrangements, an employee agrees to give up part of their gross salary above the minimum salary under the applicable collective bargaining agreement in return for a benefit – for example, an electric vehicle that is also available for private use.

The planned taxable benefit rules are expected to apply to these arrangements as well.

Under the proposed rules, the relevant taxable benefit must also be recognised where a zero-emission vehicle is provided under a fixed-term or indefinite salary conversion arrangement. The amount of salary converted does not generally reduce the taxable benefit for tax purposes. The salary conversion and the taxable benefit must therefore be considered separately.

From a tax perspective, providing a vehicle under a salary conversion arrangement does not necessarily constitute purely free private use. Depending on the structure of the arrangement, there may instead be an exchange of services between the employer and the employee.

To date, the BMF has taken the view that the payroll tax benefit-in-kind value of

EUR 0 applicable to electric vehicles may also be used as the basis for VAT purposes in salary conversion arrangements. If this approach continues after the introduction of the new taxable benefit, the new benefit-in-kind value would also become relevant for the VAT treatment of these arrangements.

Evaluation scheduled for 2030

The impact of the new rules on electric mobility is scheduled to be evaluated in 2030. The evaluation is expected to assess how the amendment to the Austrian Benefit-in-Kind Regulation (Sachbezugswerteverordnung) affects both new electric vehicle registrations and the overall number of electric vehicles in Austria.

Based on the current proposal, no further adjustment to the planned taxable benefit rates is envisaged before this evaluation takes place.

If you have any questions about how the proposed changes could affect your business, our experts Irene Grass and Martin Schmidt will be happy to assist you.

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