MOBILITY 2016 TAXATION GUIDE - CVO · MOBILITY 2016 TAXATION GUIDE November 2016 ... No further...

MOBILITY 2 0 1 6TAXATION GUIDE November 2016

with the support of:

taxation with regards tocar & company car • carpooling • shuttle • taxi • public transport • bicycle & company bike

motorcycle • homeworking • combination company car & public transportcombination company car & bicycle in:

FRANCE

THE NETHERLANDS LUXEMBOURG

ITALY UNITED KINGDOM

BELGIUM

2 • CVO - MOBILITY TAXATION GUIDE •

EDITORIAL

Dear reader,

According to Oxford Dictionary, Mobility is the ability to move or be moved freely and easily and is characterized by several different modes of activity or occurrence. To help you go along your journey and manage in a smart way your drivers and employees mobility, it is mandatory to analyse all options in terms of duration, schedule, available tools and also in terms of cost. To manage your total Cost of Mobility, you need to know precisely what is at stake. Therefore it is our pleasure to share this 2016 Mobility Taxation Guide with you. In this edition, you will find an analysis of the tax rules in respect of alternative mobility modes in six countries: Belgium, France, Germany, Italy, the Netherlands, and

the UK. Our aim is to provide the reader with a practical guide over ten topics (1. Car & company car, 2. Carpooling, 3. Shuttle, 4. Taxi, 5. Public transport, 6. Bicycle & company bike, 7. Motorcycle, 8. Homeworking, 9. Combination company car & public transport, 10. Combination company car & bicycle) giving at a glance the main taxation aspects of each mobility mode in scope as well as an overview of what has changed, such as the new regime for bicycle (France), the reduction of CIT rates (Italy) or the Annual Investment Allowance expenditure limit reduction (UK).

We are very pleased and grateful to have been able to rely on BDO and Smart Mobility Management to provide you with relevant figures on recent evolutions in tax rules across Europe.

We hope you will enjoy this publication as much as we do.

Virginie ChassardHead of Corporate [email protected]

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright holder.

EDITOR: Virginie Chassard, Head of Corporate CVO22, rue des Deux Gares, 92564 Rueil-Malmaison cedex, FranceTEL.: (+33) 1 57 69 56 86 - www.corporate-vehicle-observatory.com

with the support of:

• CVO - MOBILITY TAXATION GUIDE • 3

BELGIUM

> Shortly before publication of this guide the Belgian government announced in the framework of the annual budget, that new, and probably more flexible rules will be implemented in respect to the taxation of a mobility budget. No further details were known at the publication date.> The current tax regulation is applied as described in the topics below.

WHAT HAS CHANGED?

Car & company car

1. Taxation of business use of a privately owned carIn such case, the person using his private car for business purposes can normally receive a mileage allowance from his employer.

1.1. Tax treatment in the hands of the employerFor corporate tax purposes, the corporate tax deduction is limited. The taxation is calculated on the basis of the formula ‘70/30’ where 30% is considered as fuel costs reimbursement with 75% deductibility, and where 70% are deductible based on the fuel type and the CO2 emissions of the car. For electrical cars, the costs are deductible for 120%. Fuel costs are deductible for 75%. Interest costs are deductible for 100%. For VAT purposes, there is no VAT deduction on the mileage allowance paid to the employee.1.2. Tax treatment in the hands of the employeeThe allowance paid to the employee is in principle not taxable in his hands (for a maximum lump sum allowance of € 0.3363 per km - applicable for the period July 1, 2016 until June 30, 2017 - or an allowance based on real costs incurred).1.3. Social security contributionNo social security contribution needs to be paid if the mileage allowance is granted within the authorized limitations.2. Taxation of private use of a company carIn case the company car is solely used for business purposes, no benefit in kind (BIK) is triggered in the hands of the employee. In case the company car is used for private purposes and without contribution paid by the employee, then a BIK is triggered in the hands of the employee. In this respect, it is to be noted that commuting from home to work is considered private use.2.1. Tax treatment in the hands of the employerThe car related costs are partially deductible, depending on the fuel type and the CO2 emissions.For electrical cars, the costs are deductible for 120%. Fuel costs are deductible for 75%. Interest costs are deductible for 100%. Also, 17% of the yearly BIK is to be included in the employer’s taxable profits as disallowed expenses and will be taxed. For VAT purposes, the deduction is limited to the actual professional use and is capped to a maximum of 50% and no VAT is due on the BIK.


2.2. Tax treatment in the hands of the employeeA taxable BIK arises in respect of the private use of the company car. The yearly BIK on which the employee will be taxed is calculated on the basis of the catalogue value of the car and the CO2 emissions.2.3. Social security contributionA solidarity contribution is due on each car put at disposal of an employee when the car is not strictly used for business purposes. This tax is calculated based on the CO2 emissions of the car and is deductible in the hands of the employer.2.4. Pool carIn case a pool car is also used for private purposes, the above principles apply.2.5. Commuting mileageThe employee can choose to deduct his professional expenses in his personal tax return or to opt for a lumpsum deduction. If the employee opts to deduct actual business expenses, an amount of € 0.15 per km is allowed for commuting by car from home to work.

Carpooling

If a contribution is paid by the person carpooling to the person driving the car, this contribution is usually not taxed. Also, the person carpooling may receive an allowance in this respect: the allowance will be exempt up to the price of a first class train ticket and up to a maximum of € 350 for the remaining journey.

Shuttle

1. Tax treatment in the hands of the employerWhen shuttles are organized by an employer, all costs incurred in this respect are 120% deductible. Nevertheless, some conditions have to be fulfilled such as the necessity that the shuttle is organized by the employer or a group of employers, that the costs incurred directly relate to minibus or bus as legally defined, etc.2. Tax treatment in the hands of the employeeNo taxable benefits need to be considered in the hands of the employee for the collective transport organized by the employer.3. Social security contribution - NA

Taxi

1. Tax treatment in the hands of the employerFor corporate tax purposes, taxi costs are deductible for 75%. For VAT purposes, the costs are fully deductible insofar the taxi is used for business purposes and that a compliant VAT invoice is in place.2. Tax treatment in the hands of the employeeAn allowance can be granted to the employee for a maximum of € 380. Nevertheless, in practice,

BELGIUM


taxi costs for business related trips (not commuting) will be reimbursed to the employee as a cost proper to the employer.3. Social security contributionA social security contribution is due by the employer in respect of the advantage granted to the employee. However, no social contribution has to be paid for the allowance granted to the employee for his commuter traffic unless the allowance exceeds the actual costs.

Public Transport

1. Tax treatment in the hands of the employerFor direct tax purposes, the reimbursement of the costs incurred by the employee in this respect are 100% deductible in the hands of the employer provided that the allowance is lower than the costs. For VAT purposes, the tax is fully deductible in the hands of the employer provided that the company can demonstrate the transport subscription.2. Tax treatment in the hands of the employeeThe employer is legally obliged to grant a financial intervention to the employee in case the latter comes to work by train. For other means of transport than train, the financial intervention is also mandatory insofar the commuter traffic is higher than 5 km.3. Social security contribution - NA

Bicycle & company bike

1. Tax treatment in the hands of the employerThe costs incurred in respect of bicycle storage facilities, sanitary facilities, changing rooms, bicycle purchase, accessories, maintenance, Villo subscription (self-service system for hiring bicycles in Brussels), etc., are 120% deductible. Also, the allowance granted to the employee is 100% deductible.2. Tax treatment in the hands of the employeeThe employer can (i.e. it is not mandatory) grant a tax-free allowance (compensation for, e.g., clothing related costs) of € 0.22 per km to his employee for the distance effectively covered by bicycle between home and work place or between home and a train station. Instead of the allowance per km, the employee can opt for a fixed contribution of € 380 per year. The above applies to both privately owned bicycle and company bike.3. Social security contributionNo social contribution has to be paid unless the employer puts a bicycle at the disposal of his employee by mean of a Villo subscription or a company bike and that the bicycle is also used for private purposes.

Motorcycle

1. Tax treatment in the hands of the employerFor direct tax purposes, the costs are 100% deductible insofar they have been incurred in the


framework of the professional km. For VAT purposes, the tax is 100% deductible regardless of the private use.2. Tax treatment in the hands of the employeeThe employer can grant a maximum non-taxable allowance of € 380 to his employee.3. Social security contribution - NA

Homeworking

1. Tax treatment in the hands of the employerAll costs (e.g. contribution paid to the employee, internet costs, etc.) are fully deductible.2. Tax treatment in the hands of the employeeA non-taxable allowance can be granted by the employer to the employee up to 10% of the gross remuneration (to be reduced proportionally in situations of part time employment). Conditions governed by employment law apply and determine whether such tax free reimbursement is possible.3. Social security contributionThe contribution is exempt under the same limits as above.

Combination company car & public transport

1. Tax treatment in the hands of the employerIn case an employer reimburses the public transport costs to his employee and also provide the latter with a company car, the reimbursement is not taxable as a calculation of the BIK.2. Tax treatment in the hands of the employeeCf. rules applicable for company cars and public transport.3. Social security contributionCf. rules applicable for company cars and public transport.

Combination company car & bicycle

1. Tax treatment in the hands of the employerAll costs for granting a bicycle to an employee will be 120% deductible.2. Tax treatment in the hands of the employeeIn addition to a company car, the employer can grant a tax-free bicycle allowance of € 0.22 per km to his employee for the distance effectively covered by bicycle between home and work place.3. Social security contributionCf. rules applicable for company cars and bicycle.

ContactsPeter Wuyts, Partner Tax & Legal, [email protected] Boumans, Partner Tax & Legal, [email protected]

Full downloadable pdf version via www.corporate-vehicle-observatory.com

BELGIUM


THE NETHERLANDS

> Reimbursement charging station (electrical car). Tax free, in case the employee has a company car and pays the additional tax liability. Taxed, in case the employee has a private car and the reimbursement exceeds the EUR 0,19 per business kilometer> The additional tax liability is being calculated as a percentage (depending on the CO2 emission of the car) of the catalog value of the car. In 2016 the following percentages have been added: 15% and 21%.

WHAT HAS CHANGED?

Car & company car

1. Privately owned car In the situation that the employee uses his privately owned car to commute to the workplace and for other business trip such as client visits, the employer can provide a tax free reimbursement of € 0,19 per driven business kilometre. Please note that this reimbursement should be appointed as final levy wage in the administration of your company. In case the employer would like to reimburse more than the maximum tax free allowance of € 0,19 per business kilometre, the additional reimbursement in principle is taxable. However –under conditions - , it is possible to bring this reimbursement under the free space of the work-related cost regulation. If certain conditions are met it might be a possibility to provide the employee with a fixed cost reimbursement for commuting.

2. Company car In the situation that the employee has been provided with a company car and the employee uses this car for more than 500 kilometres on an annual base for private use, this is considered to be a taxable benefit in kind.The tax liability of the company car needs to be included in the payroll. The amount of tax due is for the account of the employee. The taxable benefit is being calculated as a percentage (depending on the CO2 emission of the car) of the catalog value of the car, including VAT and Car Tax (BPM).

Carpooling

1. Privately owned car a. Carpooling organized by employeeIn the situation that the employee uses his privately owned car for carpooling, on his own initiative, the employer can provide a tax free reimbursement € 0,19 per kilometre for the commuter travel of the employee. The colleagues can be provided with this reimbursement as well. Please note that this reimbursement should be appointed as final levy wage in the administration of your company. Any detour kilometres for the carpooling cannot be reimbursed tax free by the employer.


THE NETHERLANDS

b. Carpooling organized by employerIn the situation that the employee uses his privately owned car for carpooling, on request of his employer, the employer can tax free reimburse € 0,19 per kilometre for the commuter travel of the employee as well as for the detour kilometres the employee has to drive to pick up his colleagues. Please note that this reimbursement should be appointed as final levy wage in the administration of your company. In this case the colleagues that make use of the carpooling cannot be provided with a tax free reimbursement for commuting. In both carpooling situations, if the employer would like to reimburse more than the maximum of € 0,19 per kilometre, the additional reimbursement in principle is taxable. However, under conditions it is possible to bring this reimbursement under the free space of the work-related cost regulation.

2. Company car a. Carpooling organized by employeeIn the situation that the employee uses his company car for carpooling, on his own initiative, the employee is not entitled to a tax free reimbursement. The colleagues, however, can be provided with this reimbursement of € 0,19 per kilometre. Please note that this reimbursement should be appointed as final levy wage in the administration of your company.

b. Carpooling organized by employerIn case the employee uses his company car for carpooling, on request of his employer, neither the employee nor his colleagues are entitled to the tax free reimbursement of € 0,19 per kilometre. In both cases if the employer would like to provide more than the maximum tax free reimburse-ment of € 0,19 per kilometre, the additional reimbursement in principle is taxable. However, under conditions it is possible to bring this reimbursement under the free space of the work-related cost regulation.

Taxi

The actual costs of the taxi that are business related, can be reimbursed tax free to the employee. Please note that this reimbursement should be appointed as final levy wage in the administration of your company.If certain conditions are met it might be a possibility to provide the employee with a fixed cost reimbursement for commuting.

Public Transport

There are three ways to reimburse the employee for his costs of public transport for commuting and/or business trips:1. Reimburse the actual costs tax free;2. Reimburse € 0,19 per kilometre tax free;3. In case the employee uses both private transport and public transport the entire trip can be tax free reimbursed for € 0,19 per kilometre or the actual costs of the public transport can be reimbursed plus € 0,19 per kilometre for the private transport.


Please note that these reimbursements should be appointed as final levy wage in the administration of your company. If certain conditions are met it might be a possibility to provide the employee with a fixed cost reimbursement for commuting.

Shuttle

In case the employer arranges for a shuttle bus to pick up employees to take them to the work place, this is considered transportation arranged for the employees by the employer. This is considered to be a tax free benefit provided by the employer. It is not possible to provide a tax free kilometre allowance in addition.


1. (Partly) reimbursing the purchase price of the bike to the employee The (partly) reimbursement of the purchase price of the bike to the employee is considered to be taxable wage for the employee. In case the employee uses the bike to commute to the workplace and for other business trip such as client visits, the employer can provide a tax free reimbursement of € 0,19 per business kilometre. Please note that this reimbursement should be appointed as final levy wage in the administration of the company.

Under conditions: it is possible to bring this reimbursement under the free space of the work-related cost regulation.

2. Buying a bike for the employeeIn case the employer provides the employee with a bike, the employee becomes the owner of the bike. Therefore, the purchase/real economic value of this bike is considered to be taxable wage for the employee. In case the employee uses the bike to commute to the workplace and for other business trip such as client visits, the employer can provide a tax free reimbursement of € 0,19 per business kilometre.

Under conditions: it is possible to bring this reimbursement under the free space of the work-related cost regulation.

3. Providing the employee with a company bikeIn the situation that the employer provides the employee with a company bike, the employer remains the owner of this bike. If the employee solely uses this bike for commuting and business travels, the bike is not considered to be taxable wage. In case the employee uses this bike for private purposes as well, the real economic value of the private use is considered to be taxable wage.


Motorcycle

In the situation that the employee uses his privately owned motorcycle to commute to the workplace and for other business trip such as client visits, the same applies as for the use of the car. The employer can tax free reimburse a maximum of € 0,19 per business kilometre. Please note that this reimbursement should be appointed as final levy wage in the administration of the company. In case the employer would like to reimburse more than the maximum of € 0,19 per kilometre, the additional reimbursement in principle is taxable. However, it is possible to bring this reimbur-sement under the free space of the work-related cost regulation. If certain conditions are met it might be a possibility to provide the employee with a fixed cost reimbursement for commuting.

Working from home

If certain conditions are met, it is possible to provide the employee with a fixed cost reimburse-ment for commuting. The main condition in this specific situation is that the employee for approximately 60% of the total workdays (per calendar year) commutes to the fixed work place. This leaves the possibly to work at home for approximately 40% of the total workdays (per calendar year) without losing the fixed cost reimbursement for commuting.


It is possible to tax free reimburse the costs for public transport in case the employee has a company car.


It is possible to tax free reimburse the costs of a bicycle (see above for the conditions) in case the employee has a company car.

ContactsFrederieke den Hartog: [email protected] Schalekamp: [email protected]

THE NETHERLANDS



LUXEMBOURG

> No recent changes in mobility taxation matters. > The current tax regulation is applied as described in the topics below.

WHAT HAS CHANGED?

Car & company car

A. Private use of a company carWhen a company car is granted to an employee, there is a presumption of private use unless the employee can demonstrate that he uses his/her private car to commute between his/her home and workplace and that the company car is parked in the company premises outside normal working hours.The valuation of non-pecuniary benefits is based on market value; in other words, the benefit is assessed at an amount that represents the cost that the employee would bear to obtain the benefit himself.

The tax authorities provide two methods to assess the company car benefit in kind.

• Valuation according to the cost per km - The assessment is based on the actual private mileage travelled by the employee. Therefore, the employee must keep a mileage log in which he records the kilometres traveled for private purposes, including the journey home - workplace. It is up to the employer to establish a cost per kilometre for the car made available to the employee. The taxable benefit equals the number of kilometres driven for private purposes multiplied by the cost per kilometre. The computation has to be done monthly and a schedule attached to the employee’s payslip. This is a little-used method because it is administratively binding, but it can be advantageous when the proportion of private use of the vehicle is very low.

• Lump-sum valuation - Under this method, the monthly benefit in kind arising from the private use of the car is set at 1.5 % of the purchase price of the brand new car (options and VAT included) and this irrespective of whether the vehicle is leased or rented or purchased by the employer. According to the draft law of tax reform (yet to be voted), as from 1 January 2017 the monthly benefit in kind would be determined by the motorization and the level of CO2 emissions of each vehicle. The table below illustrates the current and future percentages.


LUXEMBOURG

An employee’s contribution to leasing costs or to the purchase price of the car may impact the assessable basis within certain limits. The tax below illustrates the applicable regime.

It is common practice in case of financial leasing that the employer takes the opportunity to buy the vehicle at a residual value that is below the market value, and that this repurchase option is transferred for free to the employee and directly exercised by him. The exercise of this option can constitute a taxable benefit in kind whose value corresponds to the difference between the market value of the vehicle at the time of repurchase and the repurchase price paid by the employee. This taxable benefit is capped: the addition of the benefit in kind related to the use of the car and of the benefit in kind arising from the repurchase of the car cannot exceed the car’s purchase price less personal participations of the employee.

B. Business use of a private car - If the employee uses his/her private car for the purpose of a business trip, the expenses incurred may be reimbursed by the employer in two ways:• Either the employer reimburses effective expenses based on supporting documents;• Or the employer pays a mileage allowance, which is tax exempt if it does not exceed € 0,30 per km. The amount which exceeds this threshold is taxable and subject to social security contributions. This allowance applies irrespective of the number of kilometres driven per year and the type of vehicle.

CO2 emissionsMonthly benefit in kind according to the vehicle category

(% of the vehicle purchase price)

2016 2017

All catogories

Gasoline vehicle (sole or hybrid) or

compressed natural gas)

Diesel vehicle (sole or hybrid)

100% Electric or Hydrogen

0g/km 1.5% - - 0.5%

>0-50g/km 1.5% 0.8% 1.0% -

>50-110g/km 1.5% 1.0% 1.2% -

>110-150g/km 1.5% 1.3% 1.5% -

>150g/km 1.5% 1.7% 1.8% -

Contribution to the purchase price Contribution to the costs of leasing or rental

a contribution to the purchase price may be deducted from the value of the benefit through depreciation

a fixed lump-sum contribution to the costs of leasing or rent reduces the taxable value of the benefit

a contribution to the variable costs such as fuel, maintenance, repairs may not be deducted from the value of the taxable benefit

Cap: the deduction of the employee’s contribution is limited to 20% of the actual cost borne by the employer


C. Deductible costs/ level of deduction - All costs incurred by the employer are tax deductible in his hands.

Shuttle

1. Non taxation for the provision of shuttle services by the employer - As the journey between home and workplace is considered as a private trip, any contribution made by the employer is in principle considered as a benefit in kind. However, the tax authorities have specifically taken the stand that the provision of shuttle services by an employer to his/her employees does not constitute a taxable benefit in kind. 2. Deductible costs/ Level of deduction - All costs incurred by the employer are deductible in his hands.

Taxi

1. Business trips by taxi - If taxis are used for business travels by the employee, this will not trigger the taxation of a benefit in kind in case the costs are borne by the employer.2. Private trips by taxi - If taxis are used for private travels by the employee, the costs borne by the employer are taxable as a benefit in kind.3. Deductible costs/ Level of deduction - All costs incurred by the employer are deductible in his hands.

Public Transport

1. Business trips by public transport - The expenses incurred by the employee for business trips can be reimbursed tax free by the employer. When public transports are used, the reimbursement has to occur based on actual expenses duly documented by valid receipts. 2. Private trips by public transport - Costs for private trips by public transport that are borne by the employer are fully taxable in the hands of the employee.

3. Deductible costs/ Level of deduction - All costs incurred by the employer are deductible in his hands.


1. Business trips by privately owned bicycle - For business trips travelled by an employee with his/her privately owned bicycle, the employer may grant a tax free mileage allowance of 5 cents per km.2. Private trips with company bike - There is currently no legislation on the provision of company bikes. According to the draft law of tax reform for 2017, the provision by the employer of cycles with pedal assistance will not trigger the taxation of a benefit in kind.


We can reasonably believe that the same will apply to the provision of cycles without pedal assistance.3. Deductible costs/ Level of deduction - All costs incurred by the employer are deductible in his hands.

Motorcycle

1. Business trips by privately owned motorcycle or moped - For business trips travelled by an employee with his/her privately owned motorcycle or moped, the employer may grant a tax free mileage allowance set respectively at 28 cents per km and 10 cents per km.2. Private trips with company motorcycle or moped - There is currently no legislation on the provision of company motorcycles or mopeds. The draft law on the 2017 tax reform does not provide any specific regime either. Based on the general provisions in force, the use of a company motorcycle or moped for private trips shall lead to the taxation of a benefit in kind assessed based on market value. 3. Deductible costs/ level of deduction - All costs incurred by the employer are deductible in his hands.

Homeworking

1. Refund of overhead costs by the employer for homeworking - Wage supplements granted to the home-based worker in order to cover overhead costs are tax-exempt if they do not exceed 10% of the regular pay. The supplement is intended to compensate heating and lighting expenses and the provision of an office or a workshop. The exemption only applies if the employee works permanently from home. If the employee works from home on an intermittent basis, only the refund of actual business costs linked to the homeworking is tax exempt; a lump sum indemnity is normally taxable.2. Deductible costs/ level of deduction - All costs incurred by the employer are deductible in his hands.

ContactsMarie-Céline Klein: [email protected]ène Brua: [email protected]ëlle Lyaudet: [email protected]


For carpooling there is no particular legislation in Luxembourg nor for an employee who uses simultaneously a company car and public transport or bicycle.

LUXEMBOURG


FRANCE

> New regime for bicycles.

WHAT HAS CHANGED?

Car & company car

Tax on company carsCompanies having their registered offices or an establishment in France must declare the cars they own, lease or use (including employees’ car used for professional purposes) and pay an annual tax. The tax depends on the CO2 emission rate or on horsepower and on the type of fuel. Some vehicles can be exempt (such as 100 % electric cars). This tax is not deductible from the taxable base for corporate tax.

Expenses deductible from the turnoverReal costs linked to company cars are deductible provided that they are properly documented for accounting purposes and are paid in the interest of the company. The deduction of the rental cars costs are capped to € 18,300 (or € 9,900 for certain polluting cars).Passengers cars can be depreciated (20 - 25 % per year). The depreciation value is capped under the same limits (not applicable for certain types of business).

Business use of an employee carCosts incurred by the employees using their own cars for professional purposes (including travels between home and workplace) are expenses deductible for income tax. Employee have the choice to apply a standard professional expenses deduction equal to 10% of the taxable wages (covering all expenses including car costs) or to deduct the real costs if more advantageous. In that last case, the car costs can be based on a lump sum based on formulas provided annually by the tax authorities mixing the horsepower and the numbers of kimometres run.

Horsepower Up to 5,000 km From 5,001 to 20,000 km Above 20,000 km

Under 3HP d x 0.410 (d x 0.245) + 824 d x 0.2864 HP d x 0.493 (d x 0.277) + 1,082 d x 0.3325 HP d x 0.543 (d x 0.305) + 1,188 d x 0.3646 HP d x 0.568 (d x 0.320) + 1,244 d x 0.3827 HP and more d x 0.595 (d x 0.337) + 1,288 d x 0.401

d = distance


FRANCE

The refunds of the costs by the employers to the employees are exempt from social security contributions and income tax on the basis of the justified actual costs or on the same lump sum basis as mentioned above. In principle VAT is not deductible except in certain circumstances.Employers may also pay a transport allowance (to cover gas expenses) under conditions to employees using their personal vehicles to commute between home and workplace. This allowance can be paid to the employees having:• their home or place of work outside Ile-de-France and outside a perimeter of urban transport;• work schedules which do not allow them to use a collective mode of transport;• or, distance between home and workplace not served by public transport.The allowance granted by employers for these costs is exempt from personal income tax and social security contributions up to a maximum of € 200 per employee and per year.The transport allowance is not cumulative with the one provided by employers in respect of public transport subscriptions or with the application of a specific deduction for professional expenses.

Private use of company carsThe private use of company cars is a benefit in kind for employees. The benefit is subject to social security contributions and personal income tax. Employers value the benefit either on the actual costs or on a lump sum basis depending on the fact that the car has been purchased or rented, its age and whether employers bear the gas expenses.

Carpooling

Carpooling between private people should not lead to a remuneration of the driver. Each carpooler can deduct the costs that he bears personally to commute between home and workplace.

Shuttle

Shuttles can be organized by employers if the company is off-centered or not served by public transport. All costs incurred for the collective transport organised by employers are deductible for direct tax purposes (i.e. purchase of vehicles, management of the collective means of transport, maintenance, fuel, insurance…). The payment of a participation by employees for the use of such transport does not prevent from the deduction for corporate tax but such participation must be included in the turnover of the company. When employers take in charge the price of the shuttle to commute between home and workplace, the benefit is exempt from social security contributions and income tax for the employees.

Company car purchased Company car rented

Car up to 5 years Car more than 5 years

Employer does not bear the gas

9% of the purchase price


30% of the global costs

Employer bears the gas



40% of the global costs


VAT is deductible if vehicles have more than 8 seats (without driver’s seat) and is used to transport employees to their workplace. Part of VAT on gas can be deduced under certain circumstances.

Taxi

Taxi fares incurred for business purposes are fully deductible for corporate tax according to gene-ral tax rules. VAT is not deductible. The refund of the fares borne by employees are exempt from social security contributions and income tax provided they were used for professional purposes.

Public Transport

Public transport includes the train, tram, bus, metro or cycles provided by public transport companies. Employers must refund 50% of the cost of the fares borne by their employees to commute between home and work. VAT is not deductible. In order to benefit from this refund, employees must: • use public transports to go from home to work;• buy transport subscription (simple tickets are not refunded);• present to employers their public transport fares.

The refund is exempt from social security contributions and income. The exemption is not applicable:• to the amount beyond the 50% (except in case of long distance between home and workplace is justified by personal circumstances of the employee);• to the price of subscription not used to commute between home and workplace;• when employees do not incur expenses for travels between home and workplace; • when they have already received a compensation for expenses to commute between home and workplace for an amount equal to or greater than the mandatory participation.

Employees opting for the deduction of professional expenses under the actual costs have to add the mandatory participation of their employer to their taxable income.


For corporate tax purposes, a tax reduction is granted equal to 25% of the costs incurred for the buying and the maintenance of company bikes (including electric bikes) put at the disposal of the employees to commute between home and workplace. VAT is not deductible.A bike allowance of € 0.25 per kimometre run between home and workplace can be paid by the employers to the employees. The payment can be cumulated with the refund of public transpor-tation subscription if the use of both is required.The allowance is exempt from social security contributions and income tax up to € 200 per year and per employee.


Motorcycle

The regime applicable to motorcycle is the same as the one applicable to cars. The determination of the costs on a lump sum basis is based on a specific scale.

Homeworking

When employees perform their work at home according to the instructions of the employer, the employment contract or an amendment have to provide the terms and conditions.Employers should bear or refund all costs incurred by employees in respect of homeworking (i.e. internet connection, phone, desk, electronic devices, furniture, rents…). The legislation provides a list of the expenses which can be refunded. VAT incurred or refunded to employees for acquiring equipment and telephone/internet is deductible.The costs bear by employers are professional costs exempt from social security contributions and income tax (with a limitation at 50% for some expenses notably when employees becomes the owners of the assets). Most of the expenses must be refund based on the actual costs.


See rules applicable for company car and public transport. For travels between home and workplace, the refund of the public transport subscription exempted from social and income tax cannot be cumulated with the exemption of the allowance paid for the use of their cars by employees.

Combination company & and bicycle

See rules applicable for company car and bicycle. For travels between home and workplace, the payment of an allowance exempted from social and income tax for the use of bicycles can be cumulated with the exemption of the refund of the public transport subscription when employees have to reach a train station or when they reside outside a perimeter of urban transport.

ContactsEdouard de Raismes: [email protected] Saint-Jalmes: [email protected]

FRANCE



ITALY

> Update of the tax deductibility rates of company vehicles (IRES).> Reduction of corporate income tax rate (IRES) from 2017 (27.5% to 24%).> New figures provided by ACI (Italian Automobile Club) in 2015.> Special tax advantage for vehicles purchased or leased between 15/10 & 31/12/2016. (so called ‘superammortamento’): increase- for 40% of the acquisition cost. > Update of social security contribution amount.

WHAT HAS CHANGED?

Car & company car

1. Deductible Costs/Level of deduction (for direct tax/VAT purposes)For direct tax purposes – Italian Tax Act provides some different deducibility limits, in case the car is “exclusively instrumental” to the employer’s activity or the car is granted to employees or to directors of the company. • 100% deductible if the cars are “exclusively instrumental” to the business proper of the company (e.g. cars used by rental companies);• 70% deductible without any limit when cars are granted to employees for both business and private purposes for more than half of the fiscal year. If the car is provided for less time, the related expenses are 100% deductible to the extent of the amount regarded as a benefit taxable on the employee (for the amount exceeding the benefit, the deductibility is limited to 20%);• 20% deductible when cars are not allocated to employees or granted to employees only for business use on a maximum relevant amount of € 18,075.99 of the car purchase price (the exceeding amount is not deductible). Special thresholds are applicable for rental and leasing agreements.

For cars granted to directors - the deductibility of related costs is determined by the use of the cars:• Business and private use: 100% deductible to the extent of the amount regarded as a benefit taxable at director’s level;• Exclusive private use: 100% deductible to the extent of the amount regarded as a benefit taxable at director’s level.

For the amount exceeding the benefit, the deductibility is limited to 20% on a maximum relevant amount of € 18,075.99.

Cars granted to members of company - the expenses related to the cars granted to the company members without the title of employee, director or self-employed worker, are deductible up to the limit of 20%. The assignment of a company car to a partner generates a taxable other income (so called “reddito diverso”) given by the difference between the market value of the car and the amount paid by the beneficiary.


ITALY

Taxation of business use of a privately owned car - in case the employees or the directors of the company use their own car for business use, the related expenses (need documental evidence) claimed for refund by the employees are deductible by the company for IRES purposes according to specific parameters (e.g. “Tabelle ACI”). These expenses are deductible for IRAP purposes according to specific conditions.Local income tax purposes (IRAP) - The expenses are deductible according to specific conditions.For VAT purposes - For vehicles and related usage expenses the VAT law provides a 40% limits to deductibility of input VAT charged by the suppliers (vehicles used for business and personal purposes). This restriction is not applicable to the vehicles used exclusively in the course of business and to the vehicles that are the object of the business activity (for example the vehicles of a leasing company) or are used by representatives and sales agents. Moreover, special thresholds are applicable for rental and leasing agreements. As provided for direct tax purposes, the VAT taxable basis is determined on the basis of ACI tables.2. Benefit for the employee The car benefit constitutes taxable income to the employee. The taxable benefit is equal to 30% of the amount determined on the basis of figures provided by a special public entity called ACI (Italian Automobile Club), assuming a yearly use of 15,000 km. 3. Social security contribution The taxable income for the “Social security” purposes is calculated as foreseen for tax purposes. Rates vary according to the sector of activity and the employee’s job title. General rate is 9.19%, plus 1% over € 46,123 (up to a cap of € 100,324).

Carpooling

Carpool organized by the employeeAssuming that the carpool is organized between employees acting as individuals, the possible refund received should be not relevant for tax purposes, therefore it is not deductible for co-drivers. In case a company car is used for carpool, the cost will be deductible for corporate income tax purposes by the employer.Carpool organized by the employer1. Deductible Costs/Level of deduction (for direct tax/VAT purposes) - See rules applicable for company car.2. Contribution paid to the employee/financial intervention - Theoretically, the taxable income has to be allocated to the different employees according to the time but, because of the difficulty of this process, the total taxable benefit can be attributed to one employee.3. Social security contribution - See rules applicable for company car.

Shuttle

In case the shuttle (i.e. vehicle for the transport of up to 9 individuals) is used to supply a service for the employees of the company, the car expenses are deductible for the 20% of their amount. For IRAP purposes, these expenses are deductible. The VAT rules applicable are the same foreseen


for the deduction of the company car expenses (VAT is totally deductible in case no alternative public transport is available).

Taxi

1. Deductible Costs/Level of deduction (for direct tax/VAT purposes)For Direct tax purposes - Full deductibility is allowed for the expenditure related to cars used for supplying a public transport service (e.g.: taxi).For VAT purposes - Taxi (we understand this is a public transport service) is VAT exempt.2. Contribution paid to the employee/financial intervention - NA3. Social security contribution - NA

Public Transport

1. Deductible Costs/Level of deduction (for direct tax/VAT purposes) - For direct tax purposes the expenses inherent to the business activity (e.g. train, bus, airplane) paid by the company for its employees are fully deductible.For VAT purposes - the expenses related to the public transport are not deductible unless the company carries out that specific activity.2. Contribution paid to the employee/financial intervention - In case the costs for the public transport tickets anticipated by the employee and recharged to the company, the related cost is deductible (need documental evidence of the expenses).3. Social security contribution - No social security contributions due on the payment of recharged public transport cost by the employee.


1. Deductible Costs/Level of deduction (for direct tax/VAT purposes)The expenses related are fully deductible for both direct tax and VAT purposes, to the extent that the bicycle and company bike are used for business.

Motorcycle

1. Deductible Costs/Level of deduction (for direct tax/VAT purposes) for the employerFor direct tax purposes – The rules are the same of the above described provisions for company cars. The only difference is the amount relevant for tax purposes that is determined as follows (the exceeding amount is not deductible): up to € 4,131.66 or € 2,065.83 of the motorcycle purchase price (on the basis of motorcycle engine capacity). For VAT purposes - The rules applicable are the same applicable for the deduction of the vehicles costs.


2. Contribution paid to the employee/financial intervention - See rules applicable for company car.3. Social security contribution - See rules applicable for company car.

Homeworking

1. Deductible Costs/Level of deduction (for direct tax/VAT purposes)All costs (e.g. internet connection, materials, contribution paid to the employee...) incurred in the framework of the home working will be fully deductible.2. Contribution paid to the employee/financial interventionConcerning home working expenses which are anticipated by the employee and following recharged to the company, the related cost is deductible to the extent that the employee provides documental evidence of these expenses.3. Social security contributionGeneral rate is 9.19%, plus 1% over € 46,123 (up to a cap of € 100,324).


1. Deductible Costs/Level of deduction (for direct tax/VAT purposes)See rules applicable for company car and public transport 2. Contribution paid to the employee/financial interventionSee rules applicable for company car and public transport.3. Social security contributionSee rules applicable for company car and public transport.


1. Deductible Costs/Level of deduction (for direct tax/VAT purposes)See rules applicable for company car and bicycle2. Contribution paid to the employee/financial interventionSee rules applicable for company car and bicycle.3. Social security contributionSee rules applicable for company car and bicycle.

ContactsGianluca Marini, [email protected] Marco Lais, [email protected] Vittoria De Nittis, [email protected]

ITALY



UNITED KINGDOM

> The Annual Investment Allowance expenditure limit is reduced from £500,000 to £200,000 from 1 January 2016.

WHAT HAS CHANGED?

Car & company car

Business use of a privately owned carCorporate taxCosts borne by a company are deductible for tax purposes in the UK, if the relevant expenditure has been ‘wholly and exclusively incurred for the purposes of the company’s trade’. On this basis, any costs incurred by the company would be deductible for corporate tax purposes, whilst the taxability in the hands of the employee would depend on the nature of the costs.

VATWhere an employee receives a mileage allowance (which may cover fuel as well as general wear and tear to the vehicle) the employer is only entitled to reclaim VAT relating to the fuel element of the allowance, provided the fuel is purchased for business purposes. The employer is required to keep detailed mileage records per employee for each claim made and VAT invoices or VAT receipts dated on or before the trip must be retained.

Income tax and social security Under current rules (2016/17) employers can pay employees who use their privately owned car for business travel up to 45p per mile for the first 10,000 miles of qualifying business journeys and 25p per mile thereafter without income tax or social security implications. If an employee receives less than these amounts from their employer, they can claim additional tax relief through their individual tax return. When an employee travelling on business carries fellow employees as passengers they may be reimbursed a further 5p per passenger per mile tax free provided the journey is a business journey. Payments in connection with non-business journeys such as commuting, or payments in excess of these amounts will give rise to income tax and social security, and the cost of commuting mileage cannot be deducted in the employee’s personal tax return

Taxation of private use of a company carCorporate taxWhere a car is purchased outright, the company will capitalise the cost of the car and will be entitled to an annual writing-down allowance as a corporate tax deduction (similar to tax deprecia-tion and referred to as a capital allowance). The capital allowances treatment for cars encourages


UNITED KINGDOM

companies to purchase cars that are better for the environment. The following rates apply form 1 April 2016. Cars emitting above 130g/km of CO2 receive a writing down allowance of 8% p.a., whereas cars emitting CO2 between 75g/km and 130g/km are entitled to a writing down allowance of 18% p.a. In some situations companies can claim a 100% allowance on expenditure on cars (i.e. 100% corporate tax deduction in the year of purchase). To qualify, the car must be new (not second hand) and either have CO2 emissions of less than 75g/km, or be an electric car. For cars acquired via hire purchase, a writing-down allowance based on the above is given on the full purchase price of the car as soon as it comes into use in the business (despite payments of the instalments being made at a later date). Again, the interest element of the instalment payments will be deductible as a revenue expense in the year the interest is paid. If the company acquires a car under an operating lease (<5 years) and the car emits over 130g/km, 15% of all rental payments are disallowed for corporate tax purposes. A finance lease is treated in the same way as an operating lease, unless certain detailed provisions apply. If a company enters in to a finance lease to buy a car, they may only claim the proportion of the writing down allowances in the year in which the car is bought. The proportion allowed as a writing down allowance corresponds to the company’s period of ownership of the car in that accounting period.

VAT VAT incurred on the purchase of a car is not deductible by the employer, unless the car is used exclusively for business purposes. In practice this is difficult to evidence and VAT recovery is only achieved in limited circumstances. VAT incurred by the employer on the long term lease of cars is only 50% recoverable, which should be clearly highlighted on the invoice. Short terms hire cars of 10 days or less can be recovered, subject to the usual rules. If the employer pays for the employee’s fuel, there are different VAT approaches to take:• Claim all of the VAT as input VAT – this is only where the car is used for 100% business purposes • Claim all of the VAT as input VAT and charge output VAT in the form of a fuel scale charge to account for the element of private use (rates published on HMRC’s website).• Do not claim any input VAT and do not declare a reverse charge.Use detailed mileage records and deduct input VAT on the business element only. The employer is required to keep detailed mileage records for each employee. Invoices for fuel must be retained by the employer and can either be a full VAT invoice or a simplified VAT invoice (retail receipt) dated on or before the day of the business trip.

Income tax and social securityThe private use of a company car gives rise to a taxable benefit for employees (at their marginal tax rate), and an employer social security liability (13.8% of the benefit for 2016/17). The value of the benefit is based on a percentage of the list price of the car determined by the level of CO2 emissions of the car, encouraging employees to drive low emission cars. The charge builds up from 7% of the list price for cars emitting CO2 of 0-50g/km up to a maximum charge of 37% of the car’s list price for cars emitting the most CO2. Diesel cars are subject to a 3% supplement, also capped at 37%. The relevant percentages outlined are correct for the 2016/17 tax year but the lowest applicable percentage is set to increase in future tax years. The UK tax authorities are reviewing how they can continue to incentivise employees to drive low emissions company cars. There are additional rules for cars registered on or after 1998 which do not have an approved CO2 figure. The taxable benefit may be reduced if the employee makes a contribution towards the capital cost of the vehicle. Where


fuel is provided for private use, a separate benefit arises which is liable to income tax by the employee, and employer social security (13.8% for 2016/17). The benefit is calculated using a set figure for the year (£22,200 for 2016/2017) which is multiplied by the same percentage as that used for the calculation of the company car benefit. Where fuel is reimbursed solely for qualifying business journeys, employers can reimburse employees for qualifying business mileage in company cars without income tax or social security arising based on actual fuel costs or by using advisory fuel rates (AFRs) published by the tax authorities on a quarterly basis. The rates are based on the cylinder capacity and fuel type of the vehicle. The cost of commuting mileage cannot be deducted in the employee’s personal tax return.Employers can make a company car available to employees, without income tax or social security consequences if the following conditions are met, such that the car is considered a “pool car”.• used by more than one employee;• not ordinarily used by one employee to the exclusion of others;• not normally kept at or near employees’ homes; and• used only for business journeys – private use is only permitted if it is merely incidental to a business journey.

Car parking at the workplaceCorporate taxAll costs incurred by the company in relation to providing car parking space to employees at or near the company’s workplace are 100% deductible in the corporation tax return. The costs will be deductible if paid directly by the company (i.e. rental of car parking space) or if the company reimburses the employee for car parking costs.

VAT If a charge is made to employees for parking, this will be subject to VAT.

Income tax and social security The cost of the provision of a car parking space at or near the employee’s workplace by the employer, whether or not on the employer’s property, does not give rise to an income tax or social security liability.

Carpooling

Carpool organized by the employeeCorporate taxIf a carpool is organized by the employees of a company, with no involvement or costs borne by the company, then there should be no direct corporate tax consequences for the company. If the company organizes a car pool, all costs incurred by the employer in relation to setting up and operating the carpool should be 100% deductible in their corporate tax return.

VAT VAT on fuel can become recoverable for business use trips but not home to workplace (see fuel section above for conditions).


Income tax and social security Where an employee uses their own car to organize a car pool, there should be no UK employment implications for the employee provided that the employer does not incur any costs associated with the car pool. There are no specific income tax or social security exemptions for a car pool organized by the employer, and if the employer in some way benefits an employee or employees in relation to a non-business journey a benefit liable to income tax and social security may arise. There is a limited exemption from income tax and social security when the employer pays for a taxi for an employee to return home from work if their regular carpooling arrangement cannot be used in unforeseen circumstances.

Shuttle

This section assumes that a shuttle bus service is organized by the employer to allow employees to travel to work.

Corporate taxAll costs incurred by the company in relation to running the shuttle service are 100% deductible in their corporate tax return. Assuming there is no benefit to the employee (see below) then no further tax consequences for the company should arise.

VATIf the shuttle is provided free of charge, VAT incurred by the employer on the costs of upkeep of the bus may be recoverable.

Income tax and social securityAn employer can provide or subsidise a workplace bus to transport employees between home and work without incurring income tax or social security if the following conditions are met:• the bus or minibus has a seating capacity of 9 or more (10 including the driver); • the service is available to all employees;• the main qualifying use of the service is travel by employees between home and their workplace or between workplaces; and• substantially the whole use of the service is by employees (and their children).

If any of the above conditions are not met, the provision of the shuttle bus may be a taxable benefit for the employees and potentially subject to social security.

Taxi

Corporate tax Where an employee incurs taxi costs in relation to a business journey (i.e. travel to a client’s premises) in the performance of their duties and the company reimburses the employee for these costs (or the company meets the cost directly), then the expense incurred by the company is 100%

UNITED KINGDOM


deductible in their corporate tax return. If the taxi expenditure is in relation to a non-business related journey (i.e. travel in respect of entertaining a client) this cost borne by the company will be non-deductible for corporation tax purposes.

VAT VAT incurred by the employer on taxi fares for employees is recoverable provided the taxi fares are incurred for business purposes. VAT invoices must be retained.

Income tax and social securityIf the employer pays for or reimburses the cost of a taxi for an employee, no income tax or social security will arise provided it is for a qualifying business journey.If the employer meets the cost of a taxi for a private journey, such as commuting, a benefit will arise which will be liable to income tax and employer social security, potentially employee social security, unless the following conditions are met:• the employee is required to work later than usual and until at least 9pm;• such late-night working occurs irregularly;• by the time the employee stops work, either public transport has ceased or it would not be reasonable to expect the employee to use it;• the transport provided is by taxi or equivalent road transport; and• no more than 60 journeys are made in a year.

Public Transport

Corporate taxIf an employee incurs public transport costs in relation to a business journey (i.e. travel to a client’s premises but not for entertaining) in the performance of their duties and the company reimburses the employee for these costs (or the company meets the cost directly), then the expense incurred by the company is 100% deductible in their corporate tax return.

VATPublic transport, provided the vehicle is equipped to carry at least 10 people (including the driver), is zero rated in the UK so there should be no VAT cost.

Income tax and social security Employers can pay or reimburse to employees the cost of travel on public transport for qualifying business journeys without a liability to income tax or social security arising. If the cost of travel for home to work journeys is borne by the employer, this would give rise to a benefit, subject to income tax and employer, and potentially employee, social security. If the employer provides a subsidy directly to a public bus company, employees may be able to use the bus service for home to work travel without a taxable benefit arising, provided the service is made available to all employees and the main use of the bus service by employees is for travel between home and work.



This section has been written on the basis that it refers to either the use by employees of their own bikes in the performance of their duties or the use of the ‘Cycle to Work’ scheme available in the UK. Under the ‘Cycle to Work’ scheme, the employer purchases (or leases) bikes which they then lend or hire to their employees. The employee’s main use of the bicycle must be for commuting or travelling between workplaces. The bicycles are usually provided to the employee by way of a salary exchange arrangement (see below), where the bicycle remains property of the employer. At the end of the hire period, the employee may have the option to purchase the bike from their employer at market value.

Corporate taxWhere an employee uses their own bicycle for a company’s business journey, a mileage allowance is available to them from the company. Commuting is not a qualifying business journey. The cost to the company of paying this allowance to their employees is 100% deductible in their corporate tax return. Under the ‘Cycle to Work’ scheme, the company may either purchase or lease the bicycles to hire to the employees. Where bicycles are purchased by the company, capital allowances should be available for the company as a corporate tax deduction. The company should either be eligible to a 100% deduction in the first year (referred to as an ‘Annual Investment Allowance’) or a writing down allowance will be available at 18% per annum. If the company leases bicycles, rather than buys them, then the corporate tax treatment varies depending on the precise nature of the lease. However, broadly all costs associated with leasing the bicycles are 100% deductible either in the year in which the expenditure is incurred or on a writing down basis over the life of the asset.

VATWhere an employer operates a ‘Cycle to Work’ scheme in conjunction with salary exchange, VAT must be accounted for on the amount of salary deducted each month, as this represents consideration from the employee for the provision of the bike. VAT incurred on purchasing and maintaining the bike, and associated safety equipment may be recovered. The employer is able to recover input VAT incurred on the cost of purchasing and maintaining the bike and associated safety equipment as a general business overhead, subject to their partial exemption status.

Income tax and social securityEmployers can pay employees who use their privately owned bicycle for qualifying business journeys up to 20p per mile free of income tax and social security. If an individual receives less than these amounts from their employer, they can claim additional income tax relief through their individual tax return. Under the ‘Cycle to Work’ arrangement, the employer can provide the employee with the use of a cycle without a benefit arising, if the arrangement is available to all employees and the bicycle is used mainly for journeys between home and work. If the conditions are not met, the bicycle would be considered a benefit and income tax and social security would be payable. The provision of a bicycle is usually through a salary exchange arrangement whereby the employee agrees to a contractual reduction in their gross pay and in return the employer provides

UNITED KINGDOM


them with the use of the bicycle. The employee receives the use of the bicycle and also saves income tax and social security on the salary exchanged and the employer saves social security on the salary exchanged.

Motorcycle

Corporate taxWhere an employee uses their own motorcycle for a company’s business journey, a mileage allowance is available to them from the company. The cost to the company of paying this allowance to their employees is 100% deductible in their corporate tax return. Where a motorcy-cle is purchased by a company, the company should be entitled to a tax deduction either by way of an Annual Investment Allowance or a writing down allowance at 18% per annum. The individual position of the company will dictate the capital allowance treatment of the motorcycle purchased.

VATInput VAT incurred on the motorcycles purchased by the employer is recoverable as an overhead of its business, however adjustments must be made to take into account any private use by the employee (where no charge is made).Where the employer charges the employee for private use, the VAT incurred on the purchase of the motorcycle should be fully recoverable. VAT would be due on the amounts paid by the employee.

Income tax and social security Employers can pay individuals who use their privately owned motorcycle for qualifying business journeys up to 24p per mile free of income tax or social security. If an individual receives less than these amounts from their employer, they can claim additional tax relief through their individual tax return. If the company provided a motorcycle to the employee which was made available for private use, this would constitute a benefit for the employee and would be taxable in accordance with the rules for the private use of an employer’s asset, which determines that the benefit value of the is the higher of:• 20% of the market value of the motorcycle when first provided as a benefit to an employee; or• the hire/rental charges incurred by the employer in the provision of the motorcycle (including additional costs incurred by the employer).

The employer can reimburse the actual cost of fuel for qualifying business journey mileage undertaken in an employer provided motorcycle free of income tax and social security.

Home working arrangements

Corporate taxWhere an employee works from home for the performance of their duties, any costs incurred by the company in reimbursing the employee for business costs incurred are 100% deductible for corporation tax.


VAT The employer must use a method which is fair and reasonable and keep records to evidence the apportionment between business and private use. The amount of input VAT recoverable by the employer is limited to the business element.

Income tax and social securityIf the employer provides equipment, services or supplies for business only use to an employee who works from home and any private use of the items provided is insignificant, no income tax or social security will be payable. Examples may include: a computer, certain office furniture, and, potential-ly, an internet connection. Where there is significant private use, income tax and social security will be due on the value of the benefit provided. The employer can also reimburse an employee for additional household expenses incurred such as gas or electricity charges, because they have to work from home for specific reasons. Up to £4.00 per week or £18 per month can be reimbursed without the employer needing to keep records. Amounts in excess of this may be subject to income tax and social security unless actual costs can be evidenced. Unless there is a business require-ment for the employee to work from home, the tax authorities are likely to consider that travel between the employee’s home and the employer’s premises is commuting. If so, there may be income tax and social security (and corporate tax and VAT) consequences if any of these travel costs are paid or reimbursed by the employer – see other sections for further details.

Combination company car and public transport

The principles set out above separately for company cars and public transport apply for corporate, VAT and income tax and social security purposes, and there are no specific considerations if they are used in combination.

Combination company car and bicycle

The principles set out above separately for company cars and bicycles apply for corporate, VAT and income tax and social security purposes, and there are no specific considerations if they are used in combination.

ContactsCLAIRE MURRAYDirector - Employment Tax / Human Capital+44 (0)20 7893 3433 (DDI) / 553433 (internal)+44 (0)75 8395 4690 (mobile)+44 (0)20 7935 1253 (Fax) [email protected]

UNITED KINGDOM


CONTRIBUTORS

The Corporate Vehicle Observatory (CVO) is a neutral knowledge sharing platform dedicated to all corporate fleet stakeholders whether they are private or public companies, fleet owners, fleet lessors, car manufac-turers or media. The CVO was founded in 2002 by BNP Paribas and its subsidiary Arval specialized in the full service leasing of corporate fleets. The Corporate Vehicle Observatory is present today in 15 countries and its mission is to inform all the players of the industry, engaging them in discussion about the developments of corporate Mobility in its broadest sense. Safety, alternative energies and fuel, to name but a few are some of the key industry trends that the CVO observes and analyses both at local and international level.www.corporate-vehicle-observatory.com

BDO Belgium specializes in four areas: Audit & Assurance, Accounting & Reporting, Tax & Legal, and Advisory Services (Corporate Finance, Organization & Performance Management, Digital & Innovation, Human Capital, Interim Management and Risk Advisory). BDO equals high level expert advice. Availability, proximity, integrity, a pragmatic approach and our international network are our main strengths. In Belgium BDO has more than 550 Partners and staff spread over the whole country. We work from 9 offices located in Antwerp, Brussels (Airport), Brussels (Centre), Ghent, Hasselt, La Hulpe, Liège, Namur-Charleroi and Roeselare. BDO is part of a strong international network with about 65,000 partners and staff active in 154 countries. www.bdo.be

Smart Mobility Management (SMM) is the leading B2B communication platform for decision makers in mobility. Our platform helps companies define a mobility strategy and implement a real mobility plan for all employees. SMM searches for innovation & innovative projects, business cases, new mobility solutions and mobility services from established automotive and fleet suppliers, but also from disrupters and start-ups. We want to inspire the new Global Corporate Mobility Architect and drive the future. By the publishers of Fleet Europe.www.fleeteurope.com/channels/smart-mobility

MOBILITY

CAR SHARING

MULTI MODALITY

THE MOBILITY PLAN

The changes taking place around us will radically change our ways of moving around. The car will still be there for many years, but along with other means of travel. We are entering an era of diversity and flexibility.

Customers can actually use a car without having to own one.

Mobility Solutions can be defined in various ways but essentially are aimed at providing users with means of managing personal transportation requirements.

The Mobility Plan is an approach to comprehensively address issues

regarding all travels related to a company.

www.corporate-vehicle-observatory.com


MOBILITY 2016 TAXATION GUIDE - CVO · MOBILITY 2016 TAXATION GUIDE November 2016 ... No further...

Documents

Transcript of MOBILITY 2016 TAXATION GUIDE - CVO · MOBILITY 2016 TAXATION GUIDE November 2016 ... No further...