Employment benefits tax change is proposed – the goal is to reduce traffic emissions

Tax benefits include electric cars, employee tickets, and service bikes. The Ministry of Finance asks for affidavits about the bill.

The changes are based on the government program and are included in Finance Minister Matti Vanhanen’s budget proposal for the next year. The proposals are based on the work of the working group investigating traffic tax reform. The purpose of the changes is to reduce traffic emissions.

The tax value of electric cars decreases for a certain period of time

According to the proposal, the tax value of the company’s car would be reduced by 170 euros per month, if the car did not produce carbon dioxide emissions while driving. In practice, these are purely electric cars.

The goal is to increase the percentage of zero-emissions cars while driving in the company’s fleet of cars and thus reduce emissions from traffic. The temporary tax subsidy is proposed to be applied to taxes during 2021-2023. The subsidy will apply to cars registered for the first time in Finland after 2019.

The Ministry of Finance estimates that this change will reduce tax revenues by nearly 6 million euros in three years.

The electric vehicle charging feature is proposed to be temporarily exempt from taxes

An employer can offer the tax-free shipping benefit for electric vehicles during 2021-2023. Taxable income does not arise if the business owner pays to charge the car at the workplace or at a public charging station. The car can be an employee’s car or a utility vehicle. The tax exemption applies to pure electric cars and plug-in hybrid cars.

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The Ministry of Finance estimates that the change will reduce tax revenue by a total of approximately 17 million euros in three years.

Tax exemption will be increased for employee tickets, and packages will be included with transportation services

An employee ticket constitutes tax-free income of 3,400 euros per year. This means that the current taxable quota of € 300 and € 750 will be abolished.

The proposal entails changes in taxation of packages with mobility services. Public transport share in the package is considered an employee ticket in the same way that public transport tickets are separately presented, when the employer offers the package as a business benefit.

The goal is to increase the use of public transportation on trips between home and work. The Ministry of Finance estimates that the change will reduce tax revenue by about € 5.5 million per year.

The employee bikes feature is tax deductible

According to the proposal, the employee bicycle benefit would be tax-deductible up to 750 euros per year. However, the maximum tax-free amount for an employee ticket and bike benefits amounts to a total of 3,400 euros.

Currently, the bike benefit that an employer receives in full amounts is taxable earned income, which means it is a matter of new tax support. It is difficult to assess the consequences of change, as data on the number of employment cycles are not available. If, for example, 10,000 workers benefit from a bike allowance of 750 euros, the change reduces tax revenues by an estimated 3 million euros.

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Referral action begins

The Ministry of Finance had sent the bill on Thursday, August 20, to be consulted. The consultation period ends on September 9th.

more information:

Timo Anala, Counseling Officer Tel: 02955 30318, timo.annala (at) vm.fi

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