Employer-provided Bonus for Electric Vehicle Charging: What Tax Exemptions Apply
In a move to encourage sustainable employee transportation, the tax implications of charging electric and hybrid vehicles at work have been clarified.
Employees who receive free or discounted charging for their private electric or hybrid vehicles at the workplace can benefit from tax exemptions on such charging. This means that these benefits are not considered taxable income if the charging occurs at the employer’s premises, including affiliated group companies.
Specifically, workplace charging for privately owned battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) is tax-free when it is given in addition to regular salary. This also applies to employer-provided charging cards valid at third-party chargers, equivalent to workplace charging.
Employers can also provide home charging devices (like wallboxes) for employee use tax-free if the device remains the employer’s property and is loaned to the employee temporarily.
Conversely, any employer reimbursement or financial support for charging electric or hybrid vehicles at the employee’s home is generally considered taxable employment income.
When employees use their privately owned cars for business travel, mileage reimbursements are typically non-taxable up to IRS-approved rates, but these differ from charging cost treatments.
The Lohnsteuerhilfeverein Vereinigte Lohnsteuerhilfe (VLH) highlights that employees with private electric or hybrid vehicles may benefit from tax-free charging if their workplace provides charging infrastructure.
However, if the employer reimburses electricity costs for charging at home, that reimbursement is usually treated as taxable income to the employee. Employees who receive financial contributions for home charging are responsible for reporting and paying the associated taxes.
Employers are not responsible for accounting for the tax-free supply of goods when they provide financial contributions for home charging. However, they are required to account for the tax-free supply of goods when they cover the electricity costs for external charging devices used by employees on company premises or property.
It's important to note that the tax-free charging benefit does not extend to charging done outside of the workplace or using personal charging devices at the workplace, even with employer contributions. The tax-free charging benefit only applies to charging stations located at the workplace, not at home.
This information may also be useful for employers who provide financial contributions for home charging of their employees' electric or hybrid vehicles to understand the potential tax implications.
Employers can encourage a greener lifestyle by offering tax-free workplace charging for employees' electric or hybrid vehicles, such as battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), which is considered a tax exemption. On the other hand, any employer reimbursement or financial support for charging electric or hybrid vehicles at the employee’s home is generally considered taxable employment income. Moreover, personal-finance management can be influenced by the tax-free supply of home charging devices, provided they remain the employer’s property and are loaned temporarily, as long as the charging occurs at the workplace.
