Michael Murphy (Tipperary South, Fine Gael)
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327. To ask the Minister for Finance if, in the context of Budget 2026, he will review the current operation of benefit-in-kind as it applies to electric vehicles, in particular the "original market value reduction" which stands at €35,000 until the end of 2025 but is due to fall to €20,000 in 2026 and €10,000 in 2027; if he will consider extending or maintaining this bonus reduction in order to support the continued uptake of electric vehicles by employers and employees. [48532/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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From 1 January 2023, new rates of benefit-in-kind (BIK) were applied to the provision of an employer provided car, which take into account the CO2 emissions of the car. The amount taxable as a BIK remains determined by the car's original market value (OMV) and the annual business kilometres driven, with new CO2 emissions bands used to determine whether a standard, discounted, or surcharged rate applies. This new structure with CO2-based discounts and surcharges is designed to incentivise employers to provide employees with low-emission cars.

Electric vehicles (EVs) currently benefit from a number of incentives, including preferential rates of BIK, Vehicle Registration Tax (VRT) relief of up to €5,000 to end-2025, a low annual motor tax rate, and a BIK exemption on the installation of an EV charging facility by an employer at the home of a director or employee.

Finance (No.2) 2023 extended the BIK tapering regime available for EVs to end-2027. This means that for an electric car/van made available for an employee’s private use during the years 2024 to 2027, the cash equivalent will be calculated based on the actual OMV of the vehicle reduced by:

• €35,000 in respect of vehicles made available in the 2024 and 2025 year of assessment;

• €20,000 in respect of vehicles made available in the 2026 year of assessment; and

• €10,000 in respect of vehicles made available in the 2027 year of assessment.

The reductions apply irrespective of the actual OMV of the vehicle or when the vehicle was first provided to the employee.

This tapered relief is in addition to the universal temporary €10,000 reduction applied to the OMV of cars in Category A, B, C and D, all vans and EVs to end-2025. Therefore, currently EVs with an OMV of less than €45,000 have no BIK liability, while those with a higher OMV can reduce the taxable amount by €45,000. Any portion of OMV remaining, after the reduction is applied, is chargeable to BIK at the prescribed rates. New proposals are considered and current vehicle tax policies are kept under review as part of the Tax Strategy Group and Budgetary cycle.

In relation to whether any changes to the current BIK taxation situation for company cars will be considered, the Deputy will be aware that it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.