Tax-exempt use of a company car registered in a foreign country

If you live in Finland but you work in another country, you are allowed to drive a company car with a foreign vehicle registration exempt from car tax in Finland. The majority of that vehicle’s operation must in that case take place in foreign countries, not Finland.

1

Check the requirements for tax-exempt use

If you live in Finland permanently and your employer has a permanent establishment in another country, you can operate your employer’s foreign-registered vehicle here, exempt from Finnish car tax.  Read more about permanent establishments.

In the same way, you can drive your foreign-registered vehicle in Finland exempt from tax if you are a self-employed professional and you have a permanent establishment in a foreign country, or you offer your professional services in foreign countries.

In addition to yourself, the right to tax-exempt use is also accorded to your family members. For purposes of this rule, family members are your spouse and children who live in the same household with you.

Such use of a foreign-registered vehicle is exempt from tax under the condition that in the course of 12 months, there are fewer days when you or your family drive the vehicle in Finland than when it is driven outside of Finland. For any day when you would drive it both in Finland and elsewhere, the rules require to count that day as a day of driving the vehicle in foreign countries.

If the requirements for tax exemption are not met, your driving the vehicle is subject to car tax. Read the instructions for importing a motor vehicle for taxable operation.

2

Submit the declaration of tax-exempt use

You can submit the declaration in MyTax. You must submit the declaration to the Tax Administration before you start driving the vehicle in Finland.

Go to MyTax

MyTax opens on the Your tax types tab. First select All tax types, then Activities relating to car tax. Then click the link for Declaration of tax-exempt use.

After you submit the declaration via MyTax, a confirmation letter from the Tax Administration appears in your MyTax inbox. It is an acknowledgement of receipt. The letter will also be sent to you by post.

Keep a copy of the letter with you in the vehicle, either as a paper print-out or available on the display of a mobile device. This way, you can present it to the police or Customs if necessary.

Note: The letter is not a statement of approval regarding tax-exempt use. It is your responsibility to make sure, beforehand, that the legal requirements for exemption are met. If the requirements are not met, your driving the vehicle is subject to car tax. You can request an advance ruling on how the act on car tax (Autoverolaki 1482/1994) is applied to the tax assessment of your vehicle. Read more about requests for an advance ruling.

If you cannot log in to MyTax to send the declaration, complete and submit Form 1235 (Declaration of use of a company car registered abroad, available on paper in Finnish and Swedish, link to Finnish). You will receive the acknowledgement of receipt by post. The letter is sent to the address you have indicated.

3

Keep a driver’s log

You are required to enter information about your driving in a logbook. Both electronic and traditional paper logbooks are accepted.

The following information is required:

  • Date of vehicle use, or the start and end dates of trips driven
  • Total kilometres, based on the odometer readings when each trip started and ended
  • Names of the countries (name of the country) where you drove the vehicle
  • Names of the persons (person) who drove the vehicle

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 logbook for at least 6 years. The counting of time for the 6-year requirement begins at the start of the year that follows the year when the vehicle was driven in Finland for the first time. If you fail to keep the logbook, the Tax Administration can impose a penalty charge for neglect.

4

Don’t forget that company cars are taxable income

Your driving an employer-provided motor vehicle is a benefit in kind. In income taxation, benefits in kind are earned income, subject to income taxes. Every year, the Tax Administration releases an official decision containing the currently valid rules of calculation of tax values for employer-provided benefits in kind.

In general, if you are a tax resident of Finland, your payment of tax to Finland must also cover the Finnish tax on any foreign-sourced income you may have. Accordingly, if you receive an in-kind benefit, in the form of a company car, from a foreign payor, you must inform the Tax Administration of it on your Finnish income tax return.

What is the difference between a company car (an in-kind benefit) and a business vehicle?

You can use a company car exempt from tax for private driving in addition to driving it for business purposes. At the same time, you can only use a business vehicle for work or business. Read more about business vehicles.

Shareholders’ use of company cars

If you are a shareholder in a limited-liability company, the only situation where you can use a company car exempt from tax in Finland is when you are working for the company. 

The party that enters the vehicle into service has responsibility for making sure that the requirements for tax-exempt use are met.  If they are not met, the party that begins the vehicle’s taxable operation must submit the declaration of use and the car tax return.

The limited-liability company can submit the declaration and return when the vehicle is in the company’s use, driven for company purposes. Correspondingly, if a private individual operates the vehicle, he or she can submit the declaration and return when the vehicle is driven for personal purposes or when the vehicle is an employer-provided company car.