It is useful to know the current Danish taxation and VAT regulations, whether you are a company car user or responsible for your company's car fleet. We present an overview of these regulations here.
- The taxable value of a company vehicle is calculated at 25% of the car’s taxation basis up to DKK 300,000, and 20% of the remaining value.
- The minimum taxation basis is DKK 160,000
- An environmental supplement must be added to the taxable value (see under Environmental supplement).
Calculation of the taxation basis
For the first 36 months from the vehicle's registration, the calculation basis is the taxable value stated on the leasing contract. After this, the calculation basis is 75% of the original taxable value. For example, a company car registered in January 2015 will be taxed at a lower rate as from January 2018.
Note that the rules for the calculation of the taxable value changed as of 1 January 2013 and the change also applies to vehicles already registered, i.e. with retroactive effect. A company vehicle registered in December 2013 that, according to the old rules, would be reduced to 75% taxation as of 1 January 2016, will be reduced from December 2016.
Taxable value on renewal of contract
On re-leasing or renewal of a leasing contract, where the vehicle was at least 36 months old at the time of the establishment or renewal of the contract, the practice so far has been to calculate the taxable value at 75% of the price of a new vehicle. Based on a decision from the Danish Tax Assessment Board, this practice has now been changed, so that the vehicle's current market value is used as the taxable value of leased vehicles over 36 months old that are re-leased or for which the leasing contract is renewed.
If the contract terms are unchanged during the leasing period, the taxable value is reduced to 75% of the original taxable value when the vehicle is +36 months old.
Second-hand company cars
A second-hand vehicle that is more than 3 years old (i.e. over 36 months) is valued for tax purposes at the market price including delivery costs, together with the costs of refurbishing and preparation.
If the employee is to pay part of the leasing charge, the taxable value of the company car is reduced by the amount paid. This reduction may be made from the employee's gross and/or net salary. A net salary reduction entails an equivalent reduction of the monthly taxable value.
An environmental supplement must be added to the taxable value of a free car.
(Note that as of 1 January 2013, the environmental supplement was increased by 50%.)
For passenger vehicles and vans subject to the green ownership tax rules:
- Cars registered for the first time on 18 March 2009 or later will be liable for green ownership tax.
- The environmental supplement for cars running on petrol corresponds to the annual green ownership tax for the vehicle.
- The environmental supplement for diesel cars corresponds to the annual green ownership tax, but with deduction of the green equalisation tax.
For vans subject to the vehicle excise duty rules:
- For vans registered for the first time before 18 March 2009, the vehicle excise duty rules at that time will apply, and the environmental supplement for vans will correspond to the vehicle excise duty – but without any supplement for private use.