The Slovak Electromobility Association (SEVA) has welcomed the adoption of an important legislative measure to promote electromobility in Slovakia. The change is a reduction in the rate of taxation of the non-cash income resulting from the use of business battery electric vehicles (BEVs) and plug-in hybrids (PHEVs) also for private purposes of employees from the current 1% to 0.5% of the vehicle purchase price per month, effective from 1 January 2025. This measure is expected to significantly reduce costs for employers and contribute to higher net incomes for employees, thus significantly improving the total cost of ownership (TCO) of EVs compared to ICE vehicles.
Riaditeľ Slovenskej asociácie pre Patrik Križanský, Director of the Slovak Association for Electromobility, commented on this change, “We appreciate the fact that the government has taken this important measure in these difficult times, when savings and cuts have to be made. We see this as a clear demonstration of the confidence of the government and parliament in electro-mobility and we believe that this measure will boost sales of electric cars to companies.”
The adopted rate reduction will bring tangible savings to both employees and employers. “For example, if a company electric car with a purchase price of €40,000, including VAT, is used for private purposes, the employee’s monthly non-cash income will drop from €325 to €162.5 during a typical four-year period in the company,” explains SEVA tax expert Juraj Ďuratný from D-Tax, and adds: “For the employer, this means a saving on levies, which will be reduced on average from €117.65 to €58.83 per month, saving the company up to €2,823.60 in levies alone over four years. Together with lower operating costs, this makes the operation of electric vehicles even more attractive.” But according to Ďuratný, the employee will also benefit: “In our model example, they will pay an average of €48.50 less per month in taxes and levies, a saving of up to €2,329 over four years. This means that they will have a higher net income without an increase in gross salary.”
HOW NON-CASH INCOME IS CALCULATED:
If a company allows an employee to use a company car for private purposes, this is seen as non-cash income in the eyes of the law and tax rules. In order to be able to value and tax this income, the State has set the amount at one per cent of the purchase price of the vehicle per month. This amount is added to the employee’s gross salary each month. This means that both the employee and the employer pay contributions on this amount, and the employee also pays personal income tax.
Križanský also pointed out that SEVA and its partners have long lobbied for the adoption of this legislative change. “We have spent many hours of negotiations, calculations and analyses. Our aim was to show that this measure will not only boost sales of electric vehicles, but may ultimately have a positive impact on the state budget due to higher sales of zero-emission vehicles.” However, he added that Slovakia’s adoption of this measure is only catching up with developed European countries, but also, for example, the Czech Republic, which has already introduced similar measures. “In Germany, they introduced a 0.5% rate already in 2019, only to reduce it to just 0.25% a year later for pure electric vehicles. So Slovakia has finally taken the first step that will allow our companies to better compete on the European market.”
SEVA believes that this measure can provide a boost to the stagnating vehicle market in general, not just in EV sales. The help for the market comes at a time when new vehicle registrations are slowing down in the European Union overall. However, SEVA believes that legislative support, such as a reduction in the rate of taxation of non-monetary income, can significantly help to develop demand for green vehicles in Slovakia. “We urge both employers and employees to pay attention to this legislative change,” says Križanský: “By purchasing an electric car, they can make significant savings, increase their net income and reduce the overall cost of running the vehicle. This opportunity can bring them long-term benefits that go hand-in-hand with environmental and economic benefits and the green transformation of our country.”
In conclusion, Križanský added: “SEVA has prepared, calculated and verified abroad a number of other measures to promote electromobility. We believe that an investment in zero-emission transport will pay for itself many times over, whether in increased sales, cleaner air in cities or greener and more efficient transport for all.”