For employees, there are three tax conditions for a car, which you are obliged to know. We give you the overview and help you if you have any questions.
For employees, there are three tax conditions for cars.
The three conditions are:
- Company car
- Mileage allowance
The value of cars is taxable wealth. The property value of cars is determined on a scale, based on the original list price as new.
If the car, for example, cost NOK 400,000 in 2020, the property value is set at NOK 300,000 in the tax return. This can result in a wealth tax of up to NOK 2,550.
If the car for special reasons has fallen particularly sharply in value, the value can be set lower than this scale.
Car rates - company car
If you use a car that is owned or leased by the employer, the benefit shall normally be regarded as wage income and you shall pay tax on the benefit.
The benefit for private use of a company car is set at 30 per cent of the car's list price as new up to NOK 314,400 and 20 percent of the excess list price (these rates apply for 2020 and are updated every year). You will find updated figures at the Tax Administration.
The basis for the calculation according to the previous section is basically 100 percent of the car's list price as new, but for:
- cars older than 3 years per 1 January in the income year, or
- taxpayers who prove that the professional driving exceeds 40,000 km in the income year
the calculation is based on only 75 percent of the car's list price as new.
For electric cars, the calculation is based on only 60 percent of the car's list price as new.
In the case of a combination of a car older than 3 years as of 1 January in the income year and a taxpayer who proves that the professional driving exceeds 40,000 km in the income year, the calculation is based on 56.25 percent of the car's list price as new.
When combining a car older than 3 years per 1 January in the income year and an electric car, the calculation is based on 45 percent of the car's list price as new.
In the case of a combination of an electric car and a taxpayer who proves that professional driving exceeds 40,000 km in the income year, the calculation is based on 60 percent of the car's list price as new.
In the case of a company car scheme in parts of the income year, the benefit taxation is carried out proportionally for the number of full and commenced months the car has been available.
Car rates - mileage allowance
The employer can pay the mileage allowance to the employee for professional driving with a private car. Parts of this allowance shall be taxed.
Tax-free mileage allowance for the use of a private car is in 2020
NOK 3.50 per kilometer - regardless of mileage *.
The tax-free rate also applies when using an electric car and for employees with a place of work in Tromsø. The rate also applies to travel abroad.
The rates for tax-free surcharges for passengers, use of trailers, etc. and tax-free rates for means of transport other than cars follow the special agreement.
* "The Government's rate for mileage allowance" which you find in the Government's travel regulations is NOK 4.03 per kilometer. The difference between the two rates means in practice that you pay tax of the last 53 øre you get paid per kilometer.
Company car calculator - calculate what it costs to have a company car
If your employer leases the car you use, an income benefit must be calculated in your wage income. You will have to pay taxes on this benefit. So what does it really cost to have a company car? Use Nordea Finans' company car calculator and find out.