According to the provisions of Law 227/2015 on the Tax Code, employees are allowed to use the company car under certain well-defined conditions, as follows:
- Taxation
In the case of companies that are liable to corporate income tax or micro-enterprises, where expenditure relating to cars is deductible up to a limit of 50%, in accordance with Article 25 para. (3)(l) of Law no. 227/2015 on the Tax Code, the benefits in the form of personal use of motor vehicles are not subject to income tax or social security contributions.
Otherwise, the use of vehicles of any type from the business assets for personal purposes is considered
- Evaluation
According to the methodological rules for the application of Law no. 227/2015 on the Fiscal Code, the valuation of the free use of the vehicle is made by applying a percentage of 1.7% for each month, to its entry value. If the vehicle is rented from a third party, the benefit is assessed at the rental level.
When assessing the benefit in kind of personal use of a vehicle owned by the employer for mixed use and made available to an employee, the benefit in kind is determined in proportion to the number of kilometres driven for personal use out of the total number of kilometres.
When assessing the benefit in kind of the personal use of a vehicle belonging to the employer’s mixed-use vehicle at the disposal of an employee, the round trip distance from home or residence to the place of work/place of employment and the expenses incurred in the performance of work duties are not taken into account.
For the determination of the value of the benefit in kind, mileage is registered by means of journey sheets.
Example of valuation of benefit in kind in the case of a mixed-use car: from the business assets, for personal use, is considered benefit in kind. These benefits in kind form part of the basis for calculating income tax and compulsory social contributions.
– the purchase price of the car is set at 90.000 lei.
– the amount established as benefit in kind is 90.000 x 1,7%=1.530 lei.
– 600 km are registered in the monthly mileage report, of which 60 km are driven by the employee
for personal purposes and 540 km for work purposes.
– Personal use represents 10% of the total amount of km in the month.
– the benefit in kind will be: 1,530 lei x 10% = 153 lei.