Tax-exempt use of a company car
Submit a declaration of tax-exempt use of a company car before you start using the vehicle in Finland. Read more about tax-exempt vehicle use .
The Tax Administration will confirm your declaration, but that does not mean that the Tax Administration has checked or confirmed that the requirements for tax-exempt use are met. Please remember to check beforehand whether or not you have the right to use the vehicle exempt from tax. If you do not, your use of the vehicle is subject to tax.
You will receive a letter in your MyTax mailbox as soon as your declaration has been confirmed. You can print out the letter in MyTax. You will also receive the letter by post to your home address, unless you have activated Suomi.fi messages and chosen not to receive paper mail.
- Always keep the confirmation letter in your vehicle and present it to the police or Customs if requested.
You can also submit the declaration by filing Form 1235 (Declaration of use of a company car registered abroad, available in Finnish and Swedish, link to Finnish).
- After the Tax Administration has confirmed your declaration, it will be sent by post to the address you have given.
Requirements of tax-exempt use
If you live permanently in Finland and your employer has a permanent establishment abroad, you can use a company car exempt from tax if the car is owned or possessed by your employer and permanently registered abroad. Your family can also use the car exempt from tax.
If you live permanently in Finland and you are a self-employed individual who is located abroad or provides services outside Finland, you can use a company car exempt from tax if the car is permanently registered abroad. Your family can also use the car exempt from tax.
Your family is considered to include your spouse and any unmarried children who live in the same household as you. If you live permanently with another person in a marriage-like relationship, this person is considered your spouse even if you are not married.
Your use of the company car is exempt from car tax if you and your family use the car for fewer days in Finland than abroad during each 12-month period. If you use the vehicle both in Finland and abroad during the same day, that day is counted towards vehicle use abroad.
If the requirements for tax-exempt use are not met, the vehicle is considered to have been taken into taxable use. The person who started using the vehicle must submit a declaration of use and file a car tax return. Read more about filing the car tax return.
Remember to keep a driver’s log
If you use a company car exempt from tax, and the car is registered abroad and belongs to either you or a member of your family, you must keep a driver’s log of when the car is used in Finland and when abroad. The log can be digital or on paper.
Record the following information in the driver’s log specified either by date or by trip:
- date of use, or the start and end time of the drive
- total number of kilometres driven during the date of use, or the odometer reading at the start and end of the drive
- country or countries in which the vehicle was used
- driver or drivers.
The driver’s log must also show the total number of days that the vehicle was used either in Finland or abroad during each 12-month period.
Save the driver’s log for at least six years from the start of the year following the start of the tax-exempt use. Make sure you save the log in such a way that the original records remain verifiable. If you do not keep a driver’s log, the Tax Administration may impose a negligence penalty. If you cannot prove that the requirements for tax-exempt use were met, the Tax Administration may impose car tax and late-payment interest. In addition, you may have to pay a punitive tax increase. Read more about the consequences for late filing (only in Finnish or Swedish, link to Finnish).
Shareholders’ use of company car
The Supreme Administrative Court has made a decision regarding shareholders’ use of company vehicles (decision number 2018:21). According to the decision, in order for the use of the vehicle to be considered exempt from tax, the shareholder who used the company car must actually work for the company. The Tax Administration does not investigate whether the requirements for tax-exempt use are met before confirming the declaration of tax-exempt use. The party that takes the vehicle into use is responsible for making sure that the requirements are met. If the use of the vehicle does not meet the requirements for tax-exempt use, the person who started using the vehicle must submit a declaration of use and file a car tax return on the vehicle.
What is the difference between a company car and a business vehicle?
You can use a company car exempt from tax for private driving in addition to business purposes. A business vehicle can be used only for work tasks.
Note that a 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 by filing Form 16A (earned income) or Form 16B (capital income).
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.