Tax concessions for electric vehicles for entrepreneurs

10. September 2020 | Reading Time: 5 Min

Elektro auto E mobility 2020 energy

Electric company cars with mobility subsidy & investment premium

Cost savings of over 50% for entrepreneurs. E-vehicles as non-cash benefits with mobility subsidy and investment premium. Find out how much money you save with the electric company car models like Renault ZOE or Tesla 3 in our calculations!

The guidelines for the Investment Premium Act (Investitionsprämiengesetz, InvPrG) were published on 12 August 2020 by the Federal Ministry for Digital and Economic Affairs. The investment premium is a subsidy for entrepreneurs based in Austria to be used for new capitalisable tangible and intangible investments, if initial measures are put into depreciable fixed assets between 1 August 2020 and 28 February 2021. Applications to obtain this subsidy can be submitted from 1 September 2020 until 28 February 2021 at the latest.

The premium for new investments is generally 7% (as long as there a funds available), yet the new investment premium rises to 14% for new investments in the areas of digitalisation, greening and health/life science. The following investment measures are classed as “green” ones that promote e-mobility:

  • Acquisition of vehicles powered solely by electricity and fuel cell vehicles (with restrictions, see below) as well as special e-vehicles such as e-forklifts, e-construction machines, etc.
  • Acquisition of e-bicycles and bicycles
  • Installation of e-charging points (post or wallbox), where only electricity from renewable energy sources is provided to power e-vehicles.

When it comes to new investments financed by lease, it should be noted that only investments capitalised by the company making the application are eligible for the subsidy.

Eligible electric and fuel cell vehicles

Generally speaking, the acquisition (and any potential conversion) of vehicles powered solely by electricity and fuel cell vehicles of all categories (single and multi-axle vehicles) is eligible for the subsidy.

Class N1 vehicles (with a maximum permissible gross weight < 2t) and class M1 vehicles (excluding registered e-buses) are only eligible if they have a gross list price (basic model with no extras) of less than EUR 60,000. These requirements are met by the following e-vehicles, among others: Audi e-tron, BMW i3, Kia e-Niro, Renault Zoe, Tesla Model 3.

If the aforementioned criteria are not met, it is our view that a subsidy cannot be claimed for the purchase (not even a 7% premium).

Additional tax relief for e-vehicles

Purely e-vehicles are exempt from both the standard consumption tax (NoVA) and the engine-based insurance tax. The taxable benefit in kind for employees of 1.5 to 2%, which is generally applicable to vehicles, is reduced to zero for company cars powered solely by electricity (used privately) emitting 0 g of CO2 per kilometre.

In addition, no incidental wage costs (employer contributions to social security, to the Equalisation of Family Burdens Fund (DB), supplements to the latter (DZ), local tax) are incurred when e-vehicles are provided as benefits in kind.

E-cars as benefits in kind with mobility subsidy and investment premium

The higher investment premium for investments in e-cars, which are not counted as benefits in kind either, is particularly attractive for employers as an alternative for future salary increases or salary conversions.

Two examples below provide an idea of the savings to be had here, comparing this to the costs of a salary increase after tax, resulting in a net increase in the amount of the acquisition costs of the e-car (gross acquisition costs after e-mobility subsidies).

Given that the benefit in kind is fully exempted from wage-related taxes, the possibility for the employer to deduct (some) input tax and the new investment premium of 14% for e-cars, the following examples show that providing an e-car can bring savings well in excess of 50% compared to simply paying a salary.

Model calculation 1 – Renault ZOE

Details:

  • Acquisition of Renault ZOE
    • EUR 30,590 (before deducting all e-mobility subsidies)
    • EUR 25,190 (after deducting all e-mobility subsidies)
  • Gross salary of an employee – EUR 50,000 per year
  • Alternatively – notional salary increase of around EUR 5,000 per year (for 5 years) for a comparative calculation

Calculation:

Gross VAT1 Net
Acquisition costs – AC

after deducting mobility subsidies (federal and importer) and subsidy increase (importer)

25.190,00 4.198,33 20.991,67
Investment premium 14% -2.938,83
Employer costs before corporation tax (net)     18.052,83
25% corporation tax credit from total deduction for depreciation2) -3.279,95
E-car employer costs after corporation tax 14.772,89

1 Full input tax deduction without taxation of own consumption as the acquisition costs are less than EUR 40,000 incl. VAT.
2 Assumption: Corporation tax credit from deduction of depreciation for 5 years; calculation basis for depreciation: Acquisition costs without deduction of the investment premium; then sale of electric vehicle at carrying amount/current value.

Net income for employee, private

(=acquisition costs – e-vehicle gross)

25.190,00
Total tax burden (Total employer and employee)3) 37.983,66
Total costs for employer 63.173,66
Total salary costs for employer after corporation tax 47.380,25
Employer savings 32.607,36
Savings in % 68,82%

3 Model representation.

Model calculation 2 – TESLA 3

Details:

  • Acquisition of Tesla 3 (with special fittings)
    • EUR 57,900 (before deducting all e-mobility subsidies)
    • EUR 52,500 (after deducting all e-mobility subsidies)
  • Gross salary of an employee – EUR 100,000 per year
  • Alternatively – notional salary increase of EUR 10,500 per year (for 5 years) for a comparative calculation

Calculation:

Gross VAT1 Net
Acquisition costs – AC

after deducting mobility subsidies (federal and importer)

52.500,00 8.750,00 43.750,00
Investment premium 14% -6.125,00
Employer costs before corporation tax (net)     37.625,00
Corporation tax credit from total deduction for depreciation2 -5.208,33
Taxation of own consumption3
for e-cars above luxury tax line (VAT)
2.083,33
E-car employer costs after corporation tax 34.500,00

1  Entitlement to deduct input tax up to a maximum of EUR 6,666.67 possible, since acquisition costs > EUR 40,000 (luxury tax line), see FN 3).
Assumption: Corporation tax credit from deduction of depreciation for 5 years; calculation basis for depreciation: 33,333.33 (luxury tax line 40,000 excl. VAT); then sale of electric vehicle at carrying amount/current value.
3 Consideration of taxation on own consumption for e-vehicles above the luxury tax line (max. 50% of input tax).

Net income for employee, private (=acquisition costs – e-vehicle gross) 52.500,00
Tax burden and ancillary wage costs (total employer and employee)4 65.172,41
Total costs for employer 117.672,41
Total salary costs for employer after corporation tax 88.254,31
Employer savings 53.754,31
Savings in % 60,91%

4 Model representation

TPA Tip:

Converting salary components or increases into providing an e-car to the employee is a financially very attractive alternative. E-mobility subsidies can also be deducted in addition to the new investment premium of 14%, which is a tax-free, non-repayable subsidy. The possibility of other regional subsidies for e-mobility should be explored (e.g. in Salzburg and Tyrol at present).

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