Paul Kehoe (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

57. To ask the Minister for Finance if he will address a matter regarding benefit-in-kind for electric vehicles (details supplied); and if he will make a statement on the matter. [4282/20]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

In Finance Act 2017, I introduced an exemption from benefit-in-kind for employer-provided electric vehicles (cars and vans). An electric vehicle is one that derives its motive power exclusively from an electric motor. As such, hybrid vehicles do not qualify for this treatment. The benefit-in-kind exemption applied in respect of an electric car or electric van made available for an employee’s private use for the period 1 January 2018 to 31 December 2018 and applied to both new and used vehicles.

In Finance Act 2018, I extended this favourable tax treatment until 31 December 2021. However, with some exceptions, a cap of €50,000 now applies on the market value of the electric car that qualifies for the full exemption for the years 2019 - 2021. In effect, an electric car with a market value in excess of €50,000 is subject to the normal benefit-in-kind regime on the excess amount. In Finance Act 2019, I further extended this measure to 31 December 2022.

Benefit-in-kind is applied to 30% of the original market value of a car. The original market value of a car is the price which it might reasonably have been expected to fetch if sold in the State singly in a retail sale in the open market, immediately before the date of its first registration (in the State or elsewhere). In other words, the original market value is the Irish open market price for a single retail sale immediately before the date on which the car was first registered. For a second-hand car, the original market value is the price of the car when purchased new for the first time.

In the case of an electric car with an original market value in excess of €50,000, the amount subject to benefit-in-kind for the years 2019 – 2022 is broadly calculated as follows: amount subject to tax = (original market value of the electric car - €50,000) x 30%.

As is the case for all employer-provided cars, if the annual business kilometres travelled exceed 24,000 kilometres, the 30% may be reduced to 24%, 18%, 12% or 6% depending on the amount of business kilometres travelled. If the car is only made available for part of the tax year, an adjustment to the business mileage is required for the purposes of determining the appropriate percentage. Detailed information and worked examples on the taxation of employer-provided electric cars are available on .

For the period of the Covid-19 crisis, some concessions in relation to the application of benefit-in-kind to employer-provided vehicles apply as follows:

(a) Employer Takes Back Possession of the Vehicle

Where an employer takes back possession of the vehicle and an employee has no access to the vehicle, no benefit-in-kind shall apply for the period.

(b) Employer Prohibits Use

Where an employee retains possession of a vehicle, but the employer prohibits the use of the vehicle, no benefit-in-kind shall apply if the vehicle is not used for private use. Records should be maintained to show that the employer has prohibited its use and no such use has occurred, for example communication from employer, photographic evidence of odometer etc.

(c) Employer Allows Private Use

Where an employee has a car provided by his or her employer and

- the circumstances in the previous example don’t apply

- limited or reduced business mileage (if any) is undertaken during the period of the COVID-19 crisis

and

- personal use is limited

the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of benefit-in-kind due. Thus, the percentage applied in the calculation of the cash equivalent, which is based on annualised business mileage, may have regard to the actual business mileage for January 2020, for the period of the COVID-19 restrictions. Appropriate records should be kept, for example business mileage travelled in January, amount of private use, photographic evidence of odometer etc.

Employee Continues Working

Where an employee continues to undertake business travel as usual in an employer-provided vehicle, the usual benefit-in-kind rules will apply.