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Personal Tax Treatment of Company Cars and Commuting Expenses: Estimating the Fiscal and Environmental Costs

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  • Michelle Harding

    (OECD)

Abstract

Company cars form a large proportion of the car fleet in many OECD countries and are also influential in determining the composition of the wider vehicle fleet. When employees provided with a company car use that car for personal purposes, personal income tax rules value the benefit in a number of different ways. How accurate these rules are in valuing the benefit has important implications for tax revenue, the environment and other social impacts such as congestion. This paper outlines the tax treatment of company cars and commuting expenses in 27 OECD countries and one partner country. It compares these tax settings with a stylised “benchmark” tax treatment that estimates the full value of the benefit received by employees with company vehicles. The paper demonstrates that the estimated tax expenditures associated with company car taxation in these countries in 2012 can be quite considerable. Significantly, from an environmental perspective, in most countries employees faced no additional increase in tax payable in response to an increase in the assumption of distance driven. Traitement des véhicules de société et des frais de transport au regard de l'impôt sur le revenu des personnes physiques : Estimation des coûts budgétaires et environnementaux Dans de nombreux pays de l’OCDE, les véhicules de société constituent une grande partie de la flotte automobile, et influent également sur la composition du parc de véhicules au sens large. Lorsque les salariés qui disposent d’un véhicule de société l’utilisent pour leur usage personnel, les dispositions relatives à l’impôt sur le revenu valorisent cet avantage de différentes manières. La capacité de ces dispositions à évaluer correctement cet avantage a d’importantes conséquences en matière de recettes fiscales, d’impact environnemental et d’autres coûts sociaux tels que les embouteillages. Ce document présente le régime fiscal des véhicules de société et des frais de transport dans 27 pays de l’OCDE et dans un pays partenaire. Il compare ce régime fiscal avec un régime « de référence » simplifié qui estime la valeur globale de l’avantage dont bénéficient les salariés disposant de véhicules de société. Ce document montre que les dépenses fiscales estimées qui sont associées à l’imposition des véhicules de société dans ces pays en 2012 peuvent être tout à fait considérables. D’un point de vue environnemental, on constate surtout que dans la plupart des pays, les salariés ne subissent pas de hausse d’impôt suite à une augmentation de l’hypothèse relative à la distance parcourue avec leur véhicule de société.

Suggested Citation

  • Michelle Harding, 2014. "Personal Tax Treatment of Company Cars and Commuting Expenses: Estimating the Fiscal and Environmental Costs," OECD Taxation Working Papers 20, OECD Publishing.
  • Handle: RePEc:oec:ctpaaa:20-en
    DOI: 10.1787/5jz14cg1s7vl-en
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    Cited by:

    1. Zijlstra, Toon & Goos, Peter & Verhetsel, Ann, 2019. "A mixture-amount stated preference study on the mobility budget," Transportation Research Part A: Policy and Practice, Elsevier, vol. 126(C), pages 230-246.
    2. Nikodinoska, Dragana & Schröder, Carsten, 2016. "On the emissions–inequality and emissions–welfare trade-offs in energy taxation: Evidence on the German car fuels tax," Resource and Energy Economics, Elsevier, vol. 44(C), pages 206-233.
    3. Bruno De Borger & Stef Proost, 2015. "Tax and regulatory policies for European Transport – getting there, but in the slow lane," Working Papers of Department of Economics, Leuven 497597, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    4. J. Malte Zoubek, 2018. "Spatial Productivity Differences and the Optimal Tax Treatment of Commuting Expenses," Volkswirtschaftliche Diskussionsbeiträge 187-18, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    5. Münzel, Christiane & Plötz, Patrick & Sprei, Frances & Gnann, Till, 2019. "How large is the effect of financial incentives on electric vehicle sales? – A global review and European analysis," Energy Economics, Elsevier, vol. 84(C).
    6. Xavier May & Thomas Ermans & Nils Hooftman, 2019. "Les voitures de société : diagnostics et enjeux d’un régime fiscal," ULB Institutional Repository 2013/301876, ULB -- Universite Libre de Bruxelles.
    7. Samuel Nello-Deakin & Marco te Brömmelstroet, 2021. "Scaling up cycling or replacing driving? Triggers and trajectories of bike–train uptake in the Randstad area," Transportation, Springer, vol. 48(6), pages 3239-3267, December.
    8. Peter Kasten, 2022. "Klimaschutz im Verkehrssektor: Klimaorientiertes und sozial gerechtes Marktdesign [Climate Protection in the Transport Sector: Climate-Oriented and Socially Fairer Market Design Necessary]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(1), pages 22-28, May.
    9. Savina Princen, 2017. "Taxation of Company Cars in Belgium – Room to Reduce their Favourable Treatment," European Economy - Economic Briefs 026, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Jacobs, Leif & Quack, Lara & Mechtel, Mario, 2022. "Distributional effects of carbon pricing by transport fuel taxation," Energy Economics, Elsevier, vol. 114(C).
    11. Leif Jacobs & Lara Quack & Mario Mechtel, 2021. "Distributional Effects of Carbon Pricing by Transport Fuel Taxation," Working Paper Series in Economics 405, University of Lüneburg, Institute of Economics.
    12. Meital Peleg-Mizrachi & Alon Tal, 2019. "Caveats in Environmental Justice, Consumption and Ecological Footprints: The Relationship and Policy Implications of Socioeconomic Rank and Sustainable Consumption Patterns," Sustainability, MDPI, vol. 12(1), pages 1-22, December.

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