The State Budget proposal for 2019 foresees some relevant changes, which it is important to make known to you. In summary, we have the following:
• Vehicles with a purchase price below 25,000 euros:
o Tax rate until 2018 = 10%
o Proposed tax rate for 2019 = 15%
• Vehicles with a purchase price equal to or greater than 35,000 euros:
o Taxation rate until 2018 = 35%
o Proposed tax rate for 2019 = 37.5%
The rate for the range between €25,000 and €35,000 is currently 27.5% and is not expected to change.
How to fiscally optimize your company's fleet
Personal use of the vehicleIt is important to point out at this time that the autonomous taxation on vehicles will not be applicable, if a written agreement has been signed that entails the taxation in IRS, of the personal use of a vehicle. In this case, the value that the employee must declare in his IRS will correspond to 0.75% of the vehicle acquisition cost, multiplied by the number of months of use of the same, during each year. In addition, we will have to consider the inherent cost of Social Security.
Let's now suppose that you want to analyze the hypothesis that your company will acquire a vehicle for your employees, whose purchase value will be around 22 000 euros and, in addition, you are also considering purchasing a vehicle worth 50 000 euros for you, as a manager.
Bearing in mind what we said before, let us now analyze the following cases:
Case study A1 – 22 000 euros vehicle
We assume that:
• The vehicle was purchased in 2018, with a Purchase Value (VA) of 22,000 euros
• Estimated total annual charges (includes amortization) = 10,600 euros
So we have:
Without agreement with the collaborator:
• Autonomous Taxation (TA) (10% rate) = 1 060 euros
With agreement with the collaborator:
• Amount subject to IRS corresponds to the product of 0.75% of the vehicle's acquisition or production cost for the number of months it is used (we are assuming 12) = 1,980 euros
• IRS (assuming a rate of 28.5%) = 564.30 euros
• SS (Charge + Discount) = 688.05 euros
• Tax deduction of the SS charge = 98.75 euros
• Net tax cost (1) + (2) – (3) = 1 153.6 euros
Tax savings, if there is an agreement:
• Amount = -93.60 euros
In this case there is no tax advantage in having an agreement!
Case study A2 – 50 000 euro vehicle
We assume that:• The vehicle was purchased in 2018, with a VA of 50,000 euros
• Estimated total annual charges (includes amortization) = 19,170 euros
So we have:
Without agreement with the collaborator:
• Autonomous Taxation (TA) (35% rate) = 6,709.50 euros
With agreement with the collaborator:
• Amount subject to IRS corresponds to the product of 0.75% of the vehicle's acquisition or production cost for the number of months it is used (we are assuming 12) = 4 500 euros
• IRS (assuming a rate of 28.5%) = €1,282.50
• SS (Charge + Discount) = €1,563.75 euros
• Tax deduction of the SS charge = 224.44 euros
• Net tax cost (1) + (2) – (3) = €2,621.81
Tax savings, if there is an agreement:
• Amount = 4,087.69 euros
In this case, there is clearly a tax advantage in having an agreement!
State Budget for 2019
Although this is not the final version, as this proposal will be voted on in November, the State Budget for 2019 may bring changes to the Autonomous Taxation on vehicles. This provides that the autonomous tax rate on charges related to light passenger vehicles, light goods, motorcycles and motorcycles is increased:
• GO
• VA ≥ 35,000 euros – Autonomous taxation = 37.5%
The intermediate rate of 27.5% remains unchanged (vehicles with an acquisition cost between €25,000 and €35,000)
The rates applicable to plug-in hybrid light passenger vehicles and those powered by LPG or CNG do not change.
The exclusion of autonomous taxation for vehicles powered exclusively by electricity is also maintained.
Additionally, and as a result of the new WLTP system for calculating CO2 emissions, it is planned to update the tables referring to the single vehicle tax (IUC) and the vehicle tax (ISV).
Let's see, then, the impact that these proposed changes may have on the examples above, considering that no changes are foreseen to the IRS levels:
Case study B1 – 22,000 euros vehicle
We assume that:• The vehicle was purchased in 2018, with a Purchase Value (VA) of 22,000 euros
• Estimated total annual charges (includes amortization) = 10,600 euros
So we have:
Without agreement with the collaborator:
• Autonomous Taxation (15% rate) = 1 590 euros
With agreement with the collaborator:
• Amount subject to IRS corresponds to the product of 0.75% of the vehicle's acquisition or production cost for the number of months it is used (we are assuming 12) = 1,980 euros
• IRS (assuming a rate of 28.5%) = 564.30 euros
• SS (Charge + Discount) = 688.05 euros
• Tax deduction of the SS charge = 98.75 euros
• Net tax cost (1) + (2) – (3) = 1 153.6 euros
Tax savings, if there is an agreement:
• Amount = 436.40 euros
That is, there will be a tax advantage in entering into the agreement with the employee!
Case study B2 – 50 000 euro vehicle
We assume that:
• The vehicle was purchased in 2018, with a VA of 50,000 euros
• Estimated total annual charges (includes amortization) = 19,170 euros
So we have:
Without agreement with the collaborator:
• Autonomous Taxation (37.5% rate) = 7 188.75 euros
With agreement with the collaborator:
• Amount subject to IRS corresponds to the product of 0.75% of the vehicle's acquisition or production cost for the number of months it is used (we are assuming 12) = 4 500 euros
• IRS (assuming a rate of 28.5%) = €1,282.50
• SS (Charge + Discount) = 1 563.75 euros
• Tax deduction of the SS charge = 224.44 euros
• Net tax cost (1) + (2) – (3) = €2,621.81
Tax savings, if there is an agreement:
• Amount = €4,566.94 euros
In this case, the tax advantage of having an agreement is even more significant!
Here are some important tips to optimize the fiscal management of your fleet. If you have any questions, please don't hesitate to contact us.
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