Can an employee use the company car for personal purposes?

Q&A • Car policy

Can an employee use the company car for personal purposes?

The law does not forbid personal use of a company car. The decision belongs to the company, and the choice changes how the car's expenses are deducted.

Short answer

  1. Yes, the employee can use the company car for personal purposes if the company allows it.
  2. The rules go into a car policy: who is allowed, when, within what limits and who pays for fuel.
  3. With personal use, the car is no longer used exclusively for business, so expenses are deducted at 50% (Fiscal Code, art. 25(3)(l)).
  4. VAT on the car's expenses is also deducted at 50% (art. 298(1)).
  5. For a car deducted at 50%, personal use is not a taxable benefit for the employee (art. 76(4)(ț)).

What the Fiscal Code says

For vehicles up to 3,500 kg with at most 9 seats, expenses are deducted at 50% when the car is not used exclusively for the business activity (art. 25(3)(l)). Full deduction remains only for exclusive business use, proven with trip sheets, and for the categories exempted by law: emergency, security, courier, sales and purchasing agents, paid passenger transport, rentals and driving schools. For the employee, art. 76(4)(ț) says that personal use of a vehicle deducted at 50% is not taxable income. Letter ț^1 extends the rule to companies paying micro-enterprise tax.

What the company car policy must contain

  1. Who gets a car and for which roles.
  2. Whether personal use is allowed: evenings, weekends, holidays, abroad.
  3. Who pays for fuel on personal trips and how it is settled.
  4. Who is liable for fines, damage and the comprehensive insurance excess.
  5. The driver's duties: handing in documents, reporting damage, booking servicing.

A concrete example

A company with 5 sales agents lets them take the car home and at weekends. Because the cars are used by sales agents, the company can fall under the art. 25 exception, with full deduction. The same company also gives a car to its director, used privately as well: for that car it deducts 50% of the expenses and VAT, and the director owes no tax on the personal use.

Common mistakes

  • Deducting 100% for a car the employee also uses privately.
  • Having no written policy — after damage or a fine it is unclear who pays.
  • Recording personal trips on the trip sheets of a fully deducted car.
  • Applying the same rule to all cars, although the art. 25 exceptions depend on how each one is used.

How 4fleet helps

  • You assign each car to a driver and see in its record who has it now.
  • Trip sheets have a purpose field for every trip, so you can separate business journeys.
  • The car's documents and the driver's licence expiry date sit in the app, with alerts before they expire.
  • 4fleet does not decide the tax treatment: the deduction rate is decided by your accountant, based on the car policy.

See also