New formula as of 2020

New formula for the calculation of tax deduction rate

Vehicle and fuel expenses may be partially or even fully deducted from your taxable income. In the past, the deduction rate for these expenses was determined using a graduated scale. As of 2020, a new formula (*) will be used to calculate the rate:

120% - (0.5 x coefficient x CO2 g/km)
**
*coefficient is 1 for cars running on diesel and diesel variants, 0.90 for natural gas and 0.95 for all other types of fuel

Minimum and maximum rates

The deduction of vehicle and fuel expenses has both minimum and maximum limits. The authorities have announced that once the new 2020 calculation formula is in force, these expenses will be subject to 50% minimum and 100% maximum deductions (**).

**cars with CO2 emissions exceeding 200 g, the minimum rate is 40%

Consequences for electric cars

The introduction of the 100% maximum rate means that electric cars will be 100% deductible and not 120% as before.

Expenses for fuel and interest

From 2020, fuel expenses, formerly 75% deductible, will be subject to the same rates as the vehicle expenses. Only the interest expenses will continue to be 100% deductible.

Financial consequences and sample calculation*

Vehicle taxation 2019

  • Tax deduction percentage: 80%
  • Corporate income tax benefit/month: € 230
  • Net expenses/month: € 819
  • Benefit in Kind/month: € 188

Vehicle taxation 2020

  • Tax deduction percentage: 66%
  • Corporate income tax benefit/month: € 162
  • Net expenses/month: € 886
  • Benefit in Kind/month: € 188

*The sample represents the average lease cost of a medium sized car, based on an average mileage and duration.