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Decision on temporary tax exemption for charging electric vehicles at the workplace between 1 July 2023 and 30 June 2026.
The Swedish parliament has agreed on a temporary tax exemption for EV charging at the workplace. The decision means that employees can charge their class I cars, light trucks, motorcycles, mopeds and bicycles without the electricity consumption being classed as a taxable benefit for the employee. This is provided that charging takes place from a charging point offered by the employer in connection with the workplace. The law applies from 1 July 2023 to 30 June 2026.
An employer wishing to offer this tax-free benefit should review how their specific company can apply the regulations. It also includes how they can be applied in different situations in relation to the company’s current policy. Remember that the benefit does not apply if the workplace is in the taxpayer’s residence.
Companies that offer a fuel benefit
Many companies currently offer their employees a fuel benefit, where the employer pays the employees’ fuel costs for company cars and the employees are taxed for the fuel they use for private driving. To calculate the fuel benefit, the employer must work out the total costs for all charging and refuelling for each car and each month.
Until now, the employer has had to include the cost for charging cars at the workplace in this calculation. This is very difficult to calculate in cases where electricity consumption and EV charging are included in the company’s total electricity costs and there is no technical solution to distinguish between costs for charging each car over a period of time.
The new rules that come into force on 1 July 2023 make this calculation simpler since the portion of fuel costs for charging EVs at the workplace no longer needs to be included in it.
This does not mean that the fuel benefit will disappear in its entirety, rather that the basis for the calculation excludes the cost of electricity relating to charging at the workplace. Only costs relating to charging from external charging stations and refuelling with diesel or other fuels in the case of hybrid cars provided by the employer need to be included.
Companies that offer a mileage allowance for business travel
Companies that offer employees a tax-free mileage allowance for business travel are not able to apply the new rules. As before, the employer cannot pay for the electricity used for EV charging if they use this particular allowance model. This is due to a provision in §5 of the Swedish Income Tax Act which states that tax-free allowances may be offered if all fuel expenses are paid by the employee.
This provision remains and means that there will be no change in the regulations for employers who offer a tax-free mileage allowance. In order to continue to receive a tax-free mileage allowance, employees must therefore continue to pay for EV charging and the employer may not assist with tax-free charging at the workplace.
Employees who charge their private vehicles at the workplace
Employers who offer EV charging at the workplace to employees who do not undertake business travel and use their vehicles for private use and commuting (i.e., to and from work) may also receive this benefit tax-free. It is up to the individual company to formulate its policy and decide whether or not to offer the benefit.
It is important to review how remuneration for business travel and private travel is currently handled – what does the company currently offer and what does the existing policy say?
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