Taxable value of a company car 2026: car benefit, use benefit and electric car

Where does the taxable value come from?

A car benefit arises when an employee or their family uses the employer's passenger car or van for private driving. The value of the benefit is taxable earned income, so it raises the basis for tax withholding even though the salary paid in cash does not change.

The euro amounts are confirmed annually by the Tax Administration's decision on the calculation bases of fringe benefits. The decision for 2026 (VH/6275/00.01.00/2025) was issued on 13.11.2025 and is in force from 1.1.2026. Private driving also includes trips between home and the workplace.

Free car benefit or usage benefit

A free car benefit applies when the employer pays all the costs of the car, including fuel or electricity. A usage benefit applies when the employee pays at least the running costs themselves. If the employee pays the employer compensation for the benefit, the compensation is deducted from the value of the benefit.

The taxable value consists of two parts: a base value, which is a percentage of the car's new purchase price, and a fixed monthly euro amount. The new purchase price is the car model's general recommended price, from which 3 400 euros are deducted and which is rounded down to the nearest 10 euros. Accessories worth over 1 200 euros are added to the price for the excess portion. Ordinary winter tyres with rims are not counted.

Age groups and formulas 2026

A car belongs to age group A (2024–2026), B (2021–2023) or C (before 2021) according to its year of first use. The older the car, the smaller the percentage of the price and the larger the fixed euro portion. The monthly values are:

Age group A, free car benefit: 1,5 % of the new-acquisition price + 285 €/month, usage benefit: 1,5 % + 105 €/month
Age group B, free car benefit: 1,2 % + 300 €/month, usage benefit: 1,2 % + 120 €/month
Age group C, free car benefit: 0,9 % + 315 €/month, usage benefit: 0,9 % + 135 €/month

Example calculation

Suppose a car taken into use in 2026 has a recommended price of €50,000. The new-purchase price is 50,000 − 3,400 = €46,600. The base value of age group A is 1.5% of this, i.e. €699 per month. The taxable value of the free car benefit is 699 + 285 = €984 and of the usage benefit 699 + 105 = €804 per month.

If the car is a fully electric car with 0 g/km carbon dioxide emissions while driving, 170 euros is deducted from the taxable value for each month of use under section 64 a of the Income Tax Act. The value of the free car benefit in the example would then be 814 euros per month. How much tax is ultimately paid on the benefit depends on your own marginal tax rate.

Fixed value or per-kilometre value

Instead of a fixed monthly amount, the benefit can be calculated from the kilometres driven privately. In that case a per-kilometre value is added to the base value: for a free car benefit 19, 20 or 21 cents per kilometre, and for a car-use benefit 7, 8 or 9 cents per kilometre, depending on age group A, B or C. The kilometre-based value can be cheaper if there is little private driving.

The kilometre value requires a driving log or other reliable documentation. The log must show the kilometres driven each day, and for business trips it must record, among other things, the start and end time, the departure point and destination, odometer readings, trip length, purpose of the trip and driver. If private driving is clearly over 18,000 kilometres a year, the taxable value may be increased. If business driving exceeds 30,000 kilometres in a calendar year, the base value is 80% of the usual.

Changes in 2026

The temporary €85 tax reduction for low-emission cars ended at the end of 2025, so, for example, the taxable value of many plug-in hybrids rose at the start of 2026 without any changes to the car or the leasing agreement. The €170 deduction for a fully electric car is valid in 2026.

Also new is the taxation of charging at the workplace. When an employee charges their own car or a company car at the workplace using the employer's electricity, the value of the benefit from 1.1.2026 is a fixed €30 per month for a fully electric car and €20 per month for a plug-in hybrid.

What is worth checking

Before choosing a company car, ask your employer for the car's recommended price and the prices of optional extras, and whether it is a free car benefit or a car usage benefit. Calculate the taxable value with the formula and update your tax card if the benefit starts mid-year. Car Radar gathers car-related taxes and costs in one place, and more detailed guidance can be found on the Tax Administration's pages.

Frequently asked questions

How much does the car benefit for a fully electric car fall in 2026?

For a zero-emission car, €170 is deducted from the taxable value for each month in which the car is used.

Which age group does a car taken into use in 2023 belong to?

Age group B, which includes cars first registered in 2021–2023. The formula for the free car benefit is 1,2 % of the new-acquisition price + 300 euros per month.

Are commutes counted as private use?

Yes. Travel between home and workplace counts as private use of a company car.

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Sources

The article is general information and does not replace the guidance of an authority, a lawyer or an adviser. Check up-to-date information from the sources.