Electromobility from a tax perspective

Lucie Javorová
The electromobility development is rising and this trend is also reflected in the current legislation, which tries to respond to the unclear situation regarding electromobility and thus simplify the administrative procedures related to the use of electric vehicles. In this article, we would like to look at the issue of determining the costs of electricity consumption, which is one of the specific problems with electric vehicles due to the way they are recharged.

Electricity reference price

One of the crucial problems with electric vehicles (also referred to as “EVs”) has been determining the specific price of the electricity consumed at a given time of recharging. This has been settled by the implementation of the concept of the so-called reference price of electricity, which is based on the Decree of the Ministry of Labour and Social Affairs concerning the change of the basic compensation rate for the use of road motor vehicles and meal allowances and the determination of the average price of fuel for the purpose of providing travel allowances. This decree contains, among other things, a reference price for electricity used as fuel when charging electric vehicles and is updated annually. For 2022, the reference price for electricity is set by Decree No 47/2022 of the Ministry of Labour and Social Affairs as of 08 March 2022, in the amount of CZK 6 per 1 kWh.

The electricity price stated in the Decree can be used both for the purpose of reimbursement for charging private vehicles for business trips as well as for the use of vehicles provided to employees by the employer, in situations where the employee is unable to prove the specific costs of charging the vehicle used for business purposes. A more detailed application of the electricity reference price for private EVs and EVs in company ownership is described below.

Private electric vehicles

If an employee uses his/her private electric car for a business trip at the employer's request, the employee is entitled to reimbursement for the fuel consumed (i.e. the electricity used in this case). The calculation of this reimbursement is based on the actual distance travelled (in accordance with the conditions of the business trip), the average consumption stated in the vehicle's technical certificate and the proven cost of the consumed fuel. However, it raised the question of how to determine the cost of the electricity consumed for the purpose of determining the amount of the employee's reimbursement if the EV is recharged by the employee at home.

From 2020, the reference electricity price can be used as the price per unit of electricity consumed in the case of domestic charging of electric vehicles. The total amount of compensation is then, as with hydrocarbon fuels, determined by the distance travelled and electricity consumed.

Electric vehicles in company property

As regards EVs included in company asset, generally the tax-deductible costs of fuel consumed on business trips are claimed as costs at the level of the proven amount. However, for business trips where the employee has an electric car from the employer and charges it at home, it is now also possible to use an electricity reference price and such costs are also treated as tax-deductible.

Lastly, we would like to point out that the use of the electricity reference price is voluntary (both for private EVs and for EVs in company ownership) and the taxpayer still has the option to choose to claim the true costs based on the evidence of the fuel price at the time of charging.

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Jiri Sindelar
Jiří Šindelář
Tax Director

Tax Advisory