Tax-exempt use of a company car

The tax-exempt use of a company car concerns a cross-border employee who

  • Works in a country other than Finland
  • Lives in Finland
  • Uses the car in both countries.

Under this provision of the Car Tax Act, the Tax Administration may authorise a person permanently resident in Finland to use a vehicle permanently registered abroad temporarily in Finland for 12 months without having to pay car tax. The conditions for the kind of use of the vehicle that qualifies as temporarily tax-exempt are defined in the authorisation. 

Temporary use of a company car in Finland

  • The vehicle use is deemed temporary in Finland if the person authorised to use the company car free of tax and his or her family use the vehicle in Finland fewer days than abroad during each 12-month period.
  • If the vehicle is used both in Finland and abroad during the same day, it is deemed that the vehicle is used abroad.

Conditions for granting an authorisation 

  • The person is employed by an employer whose permanent place of business is outside of Finland.
  • The vehicle is owned or held by the employer.
  • The vehicle is registered in the country where the employer is established.
  • The right to use the vehicle is based on an employment contract, for example as a car benefit.
  • The vehicle has motor liability insurance which is valid in Finland.

The Supreme Administrative Court has made a decision regarding shareholders’ use of company vehicles (decision number 2018:21). The decision requires that shareholders must de facto work for the company. The Tax Administration will take the Supreme Administrative Court’s decision into account when assessing authorisation applications for company vehicles.

The Tax Administration determines whether or not the shareholder de facto works for the company when assessing the other requirements for granting authorisation.

Handing over the vehicle to be used by another person

  • The vehicle may not be handed over to be used any other person permanently resident in Finland.
  • Family members of an employee or a self-employed person, however, have the right to the temporary tax-free use of the vehicle on Finnish roads.

Family members include the person’s spouse and their unmarried children who live in the same household. A person permanently living in a marriage-like relationship is also considered a spouse. The provisions of the Car Tax Act are also applied to partners in a registered relationship.

Use is subject to authorisation by the Tax Administration

  • The use of a company car is subject to an authorisation by the Tax Administration which can be granted for 12 months.
  • The authorisation must be carried in the vehicle when in traffic. The authorisation can be renewed if the applicant continues to meet the conditions of temporary tax-free use.
  • After the authorisation has been granted, the user of the vehicle must be able to prove that the temporary tax-free use of the vehicle in Finland has met the authorisation conditions. The use of the vehicle in Finland and abroad can be proved with a driver’s log, a written statement by the employer or other similar document.
  • If the use of the vehicle no longer meets the requirements for tax exemption, the Tax Administration must be notified of this and may withdraw the authorisation. In case of failure to inform Customs, the provisions on tax reassessment laid down in section 57 will be applied.

Submitting the application form

You can apply for the authorisation for temporary tax-free use of a company car in Finland with Form 1235 Hakemus / Lupa työsuhdeajoneuvon väliaikaiseen verottomaan käyttöön (in Finnish and Swedish only). 

Copies of the following documents are to be enclosed with the application:

  • Employment contract or statement by the employer, stating the parties of the employment contract, the duration of employment and the employee’s entitlement to the company car benefit
  • An extract corresponding to a Finnish employer’s extract from the trade register
  • Vehicle registration certificate
  • Proof of valid motor liability insurance in Finland
  • Applicant’s driving licence

Company car benefit is taxable income

If you live in Finland but receive income from foreign sources, you must generally also pay Finnish taxes on your foreign-sourced income. You can report your foreign-sourced income in MyTax or on paper form. If you have foreign earned income, you must fill out Form 16A, and if you have foreign capital income, you must fill out Form 16B.

If your employer provides a company car as a fringe benefit, it is considered taxable earned income and valued at its fair market value. The Tax Administration determines the calculation bases for the fair market values of fringe benefits annually.


Further information:

Car Tax Act (Finlex; in Finnish and Swedish only)