New tax on private use of company cars by employees

They have proposed a new tax on the use of company cars by employees who use them for private purposes. Every month companies would pay 22% VAT on 0.5% of the vehicle's initial value, while their employees would every month include 0.5% of a vehicle's initial value into their income, subject to taxation. Experts warn that this idea is against the sixth EU directive as it imposes a tax on an activity, which is not proven to have taken place. The ministry assumes that all company cars are used for private purposes and therefore all companies and employees being granted company cars would be subject to the new tax, regardless of whether they use vehicles for private purposes or not. The Ministry of Finance is expected to ammend this unfortunate proposition. Otherwise it will lead to numerous court cases, as taxpayers will probably follow the superordinate law of the EU, which will almost certainly result in them being sued by tax offices. (Puls Biznesu, pp. 4-5) J.L.