Recalculation and Taxable Value for Company Cars
The value of a company car affects the amount of tax an employee pays on the company car benefit. You are liable for company car tax if your agreement allows you to use the vehicle outside working hours.
A vehicle's value may change during its first three months on the road. As a result, the taxable value used when the vehicle was initially calculated may also change following a recalculation carried out three months after the vehicle's first registration date, in accordance with the Danish Motor Vehicle Agency's rules on recalculating taxable values. However, the taxable value cannot be reduced after the registration date during this initial period. A reduction can only be applied 36 months after the date of first registration.
The recalculation is based on the vehicle's current value after its initial period of use. The purpose is to ensure that taxation is based on a realistic valuation and accurately reflects the vehicle's value at the time it is used as a company car.
- New/Pre-owned company cars
Recalculation is only relevant for brand-new company cars.
- Market value
When a recalculation is carried out, the car's market value is determined based on the price at which the car could reasonably be sold on the open market.
- Taxable value
The value determined after three months from the date of first registration becomes the new basis for the employee's company car taxation.
How does the recalculation affect taxation?
The taxable value cannot be reduced below the level that was established on the vehicle's date of first registration. If the recalculation results in a lower value, the taxable value remains at its original level.
If the market value has increased after three months, the taxable value is adjusted upwards to reflect the vehicle's new value.
The purpose of the recalculation is to ensure that taxation is based on the vehicle's actual value.
Recalculation is not required when:
• The vehicle is used. This means that if you re-lease a vehicle, you will not experience a change in the taxable value after three months.
• The taxable value is reduced by 25% 36 months after the date of first registration.
Recalculation is required when:
• The vehicle is brand new and has been registered for three months.