tax

Vehicle-related news

Barbora Halousková
18/07/2023
tax
The following is a summary of the changes affecting passenger vehicles. The content covers business trips, excise duty, vignettes and changes related to the tax package.

Business trips made by private vehicle

In a situation where an employee is sent on a business trip during which, as agreed with the employer, a road motor vehicle other than the employer's own vehicle is used, the employee is entitled to the related compensation, namely basic compensation for wear and tear of the vehicle and compensation for fuel consumed.

In the case of basic reimbursement, simply put, the wear and tear on the vehicle is taken into account for each kilometre travelled in connection with the business trip. The rates of basic compensation are set annually by a decree issued by the Ministry of Labour and Social Affairs. As of 1 January 2023, the compensation per kilometre for single- and three-wheel vehicles is CZK 1.40 and CZK 5.20 for passenger vehicles.

For fuel reimbursements, this is the product of the fuel price and the vehicle's consumption. The employee shall prove the fuel cost by means of a proof of purchase showing the connection with the business trip. If there are several such documents, the arithmetic average shall be used.  If the employee does not prove the fuel price in this way, the employer shall use the average price of the fuel concerned, again per the Decree of the Ministry of Labour and Social Affairs. The amounts are as follows:

  • petrol 95 – 41.20 CZK (from 1.1.2023);
  • petrol 98 – CZK 45.20 (from 1.1.2023);
  • diesel fuel – CZK 34.40 (from 1.7.2023); CZK 44.10 (from 1.1.2023);
  • electricity (kWh) – CZK 8.20 (from 1.7.2023); CZK 6.00 (from 1.1.2023).

Fuel consumption is calculated from the consumption data in the technical certificate of the used vehicle, which the employee is obliged to submit to the employer. If this certificate does not contain this value, the consumption may also be proven by a technical certificate of a vehicle of the same type with the same cylinder capacity. The value of the figure for combined operation or the arithmetic average shown on the certificate shall be used.

Return of the original amount of excise duty on diesel

Earlier we informed you about the temporary reduction in excise duty on fuel, which was originally intended to last for the months of June to September 2022. While the excise duty on petrol has previously been reverted to its original level, this situation has so far persisted for diesel. However, as the price of diesel has recently remained below the price level for which the temporary reduction was introduced, the government has decided to return it to its original level of CZK 9.95 per litre since 1 August 2023.

Motorway stamps

The prices of motorway stamps will also undergo some changes, with the annual coupon expected to rise by more than half. The price in the coming years should also reflect inflation. Further, a new category of one-day coupons is to be created. An overview table with individual prices before and after 1 March 2024 can be found below.

 

Current price

Standard price since 1.3.2024

Price for natural gas or biomethane vehicles since 1.3.2024

Price for hybrids with CO2 emissions up to 50 g/km since 1.3.2024

Price for electric vehicles since 1.3.2024

Annual

1500 CZK

2300 CZK

1150 CZK

570 CZK

0 CZK

Monthly

440 CZK

430 CZK

210 CZK

100 CZK

0 CZK

10day

310 CZK

270 CZK

130 CZK

60 CZK

0 CZK

Daily

200 CZK

100 CZK

50 CZK

0 CZK

 

Other changes that are part of the tax recovery package please see below. This package is currently in the legislative process, which we monitor for you and we will continue to keep you informed.

New limit on tax deductibility and VAT deduction for the acquisition of a vehicle

The tax package includes, among other things, the (re)introduction of a limit for tax deductibility in the form of tax depreciation and for the maximum VAT refund claim for the acquisition of an M1 passenger vehicle which will be included in the fixed asset of the taxpayer, starting from the beginning of 2024.

In both cases, we are talking about the threshold of CZK 2,000,000 excluding VAT. If the entry price of the vehicle exceeds CZK 2 million, this so-called excess value will be considered tax non-deductible for income tax purposes.

In the case of value-added tax, the above threshold for a full claim to VAT refund corresponds to the amount of CZK 420,000. In other words, even if the taxpayer purchases a passenger vehicle for CZK 5,000,000 excluding VAT, which corresponds to VAT of CZK 1,050,000, it will not be possible to claim the so-called excess VAT deduction, i.e., in this case in the amount of CZK 810,000 (CZK 1,050,000 - CZK 240,000).

This limit also applies to eventual technical improvement of the vehicle, where the sum of the resulting VAT refund claim and the already claimed VAT refund must not exceed the above threshold.

Provided that the vehicle is purchased e.g., as goods (i.e., intended for sale), it is possible to claim the VAT deduction in full amount. If the vehicle is subsequently included in fixed assets, the VAT payer is obliged to reduce the VAT refund claimed if the threshold has been exceeded.

Further extension of extraordinary depreciations

The option to apply extraordinary tax depreciation for emission-free road motor vehicles acquired between 2024 and 2028 remains valid in addition to regular depreciation. Emission-free vehicles fall under the EURO 7 standard, which is defined for vehicles with zero CO2 emissions from the tailpipe. According to the information to date, this standard is due to apply from 1 July 2025.

Use of an emission-free company vehicle for private purposes

We will dwell on emission-free vehicles for a moment. The draft tax package also includes a reduced percentage of taxation of the employee's non-monetary income in the case of the use of a company vehicle for private purposes, at the level of 0.25% of the acquisition price of the vehicle. For more information on this non-monetary income, please see the section on taxation of low-emission vehicles for private use, which includes information on extraordinary tax depreciation as well.

Interested in more information related to motor vehicles? Check out the changes to road tax or read our series of articles on electromobility.

Contact our expert

Andrea Kleinov√°
Andrea Kleinová
Certified Tax Advisor
Crowe

Tax advisory