Private car or company car - Information on taxation

How exactly a car has to be declared in a tax return depends on many factors. First and foremost is the question of whether the car is used purely for private purposes or whether it is used partly or entirely for business purposes.

In this blog article, we look at how cars should be declared on your tax return, the difference between private and business use, and whether a car subscription can be an interesting alternative for private and business customers.

Note - Liability disclaimer for the information provided

We ask for your understanding that the information provided by us does not claim to be complete or correct and is no substitute for tax advice. A trustee or tax advisor can give you the best possible advice on your personal tax situation and the applicable - different - cantonal regulations.

Who has to pay motor vehicle tax in Switzerland?

Before we get to the details of your tax return, it is important to understand how vehicles are generally taxed in Switzerland. In principle, motor vehicle tax is payable on all registered vehicles from the first day of registration. It must be paid once a year in January by the owner of the vehicle.

Vehicles include not only cars but also motorcycles, mopeds, quads, minibuses, motorhomes, lorries, tractors and trailers. The final amount of motor vehicle tax varies greatly from canton to canton in Switzerland.

The calculation also varies from canton to canton and can depend on, among other things, cubic capacity, power (hp), total weight, unladen weight and combinations thereof. For an up-to-date overview, we recommend that you contact your canton directly.

What do I need to consider when completing the tax return for vehicles?

If you own one of the vehicles listed above, there are a number of things you need to consider when completing your tax return. These include how to account for the car as an asset, what deductions are available to you as an employee and how different types of company cars may be taxed.

Private car - Do I have to declare my car as an asset on my tax return?

Yes, you must declare your car(s) as an asset. A distinction must be made between the following two options.

Option 1: Taxation based on the depreciation rate

Like other assets, your car must be declared as an asset in your tax return. This is done by declaring the car's current market value (residual value). This is the amount you could receive if you sold your car today.

To avoid having to make a professional estimate of the sale value, each canton specifies a depreciation percentage, usually between 20 and 40 per cent. You can apply this to your car and its age to calculate its value.

Option 2: Direct residual value calculation without depreciation percentage

Although most cars can be taxed using the depreciation rule as they lose value through daily use, the opposite is true for some vehicles.

Classic cars, for example, fall into this category as they can increase in value over time. In this case, you must adjust your tax return to show the actual value of the car. It is important to determine this as accurately as possible, as a large discrepancy could result in subsequent tax proceedings.

Individuals - Can I deduct the cost of commuting to work on my tax return?

If you are an employee, you may be able to deduct costs for your car. Although you can usually only deduct the cost of public transport, there are some cases where you can also benefit as a car owner. For example, if it takes you significantly longer - usually at least 1 hour - to get to work by public transport than by car, you can also deduct the cost of your own car.

Important: The cantons regulate independently which requirements apply. In addition, all information is based on the situation in August 2024, i.e. the following provisions apply to private cars.

As of 2024, the deduction for direct federal tax will be 70 centimes per kilometre travelled to work, subject to a maximum of CHF 3,200 per year. Separate tax rules apply to state and municipal taxes. In the canton of Zurich, for example, a flat rate of 70 centimes per kilometre will apply in 2024, with a maximum deduction of CHF 5,200 per year for the state tax.

Company car - How to tax a company car in Switzerland

While private cars must be declared as assets and deductions can be claimed for commuting, the taxation of company cars is more complex. Below you will find the most important information on the taxation of company cars.

For a detailed overview of the taxation of company cars, please see our detailed blog article. There you will find even more information at a glance. Important: All information is based on the situation as of August 2024.

Option 1: Private use of the company car - flat-rate taxation

If, as a dependent employee, you have a company car and your employer pays all the costs of the company car, you are likely to be charged a lump sum of 0.9% of the purchase price per month as wages for private use.

The purchase price is the price actually paid, excluding VAT; in the case of a leased vehicle, it is the cash purchase price stated in the contract, also excluding VAT. The value must be at least CHF 150 per monthly payment.

Example calculation: Purchase price of the car = CHF 50’000.

• 10.8% (0.9% * 12 months) of 50’000 = CHF 5’400. This is the additional salary that you must declare in your tax return. This amount is shown in section 2.2 of your salary statement and is subject to AHV contributions.

Option 2: Private use of company car - logbook taxation

If you have a company car as an employee and only drive a few kilometres privately, it may be worth to use a logbook. In this case, the private proportion, i.e. the taxable share for the employee, is calculated on the basis of the private kilometres actually driven.

The disadvantage of this option is that the effort involved is considerably higher than with flat-rate taxation, as all kilometres driven (whether for business or private purposes) must be listed in detail. This includes the date, time, kilometres and purpose of the journey.

If you choose this option, you will be charged 70 centimes per kilometre, based on data in 2024. The costs are based on the kilometre rate in the table provided by the Touring Club Switzerland (TCS). The following is a simplified example of what a logbook could look like.

If you work full-time all year round, 220 working days are generally assumed. If you only work part-time, the number of working days will of course be correspondingly lower.

Example calculation for full-time and part-time work and a commute of 15 km:

• Full-time: 220 days x (2 x 15 km) x 0.70 CHF = 4’620 CHF

• Part-time: 220 x 80 % = 176 days x (2 x 15 km) x 0.70 CHF = 3’696 CHF

The total private contribution in the example is CHF 4’620 for full-time and CHF 3’696 for part-time.

Option 3: No private use of company car in Switzerland

If you drive a company car with permanently installed equipment, e.g. for transporting tools, and private use is severely restricted as a result, no private share is charged. The same applies to company cars that you are not allowed to use privately and that are only intended for travel to and from work.

In this case, the private share does not apply and the 'F' section on the salary statement must be ticked. If the use by the employee goes beyond the actual journey to work, a private share must be calculated as described in option 1 and 2.

Buying, leasing or subscribing to a car - does it make a difference for tax purposes?

From a purely tax point of view, all forms involve tied-up capital that has to be taxed. However, leasing and especially car subscriptions increase liquidity as, unlike buying, the entire purchase price does not have to be paid up front. In addition, companies can deduct the individual instalments for leasing and car subscriptions from their taxable income, whereas they have to depreciate them when buying.

Conclusion - taxation of private and company cars in Switzerland

Whether you drive a private car or a company car, you are subject to different tax rules. You either have to declare your car in your tax return or you have to consider the so-called non-cash benefit of the company car as a private benefit.

If, as a private or business customer, you generally don't want to waste a lot of time and are interested in a flexible and simple solution for your mobility, the car subscription offers you a number of advantages:

1. All-inclusive package: In addition to the car itself, Carvolution's car subscription also includes insurance, taxes, registration, service and maintenance as well as tyres in a fixed monthly price.

2. Flexibility and term: With a term of between 3 months and 4 years, the car is suitable for both test-driving a new model and long-term use in the field. Flexible monthly kilometre packages (350 - 3,250 km) let you pay only for what you drive.

3. Fast availability: With Carvolution, you also benefit from the fact that our vehicles on stock can be at your or your company's premises in as little as 14 days.

If you or your company is interested in a car subscription and would like to find out more, our team is always available for a non-binding consultation. In the meantime, feel free to browse our wide range of vehicles.

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