Finance Act 2022 extended the application of the special BIK rules on electric vehicles to 2025, which permit a fixed reduction in the OMV for the purposes of the calculation.2 These rules apply for fully electric vehicles only, i.e., hybrid vehicles are not covered by these favourable BIK rules.
A tapering applies from the 2023 year of assessment, such that in calculating the company vehicle BIK the OMV exemption threshold for electric vehicles will decrease to €45,000 in 2023. When the new rules originally took effect on 1 January 2023, the OMV discount was set at €35,000, but an extra €10,000 was added to the reduction under the temporary announcement, which brings the total OMV discount on electric company cars to €45,000 for 2023.
As things stand for subsequent years, a reduction of €20,000 from the OMV is permitted in 2024, and finally falling to €10,000 for 2025.
For example, for an electric vehicle acquired on 1 January 2023, with an OMV of €70,000, performing annual business mileage of 24,000KM, the BIK is calculated for the years 2023 to 2026 as summarised in the table below.
Year | 2023 | 2024 | 2025 | 2026 |
OMV | 70,000 | 70,000 | 70,000 | 70,000 |
BIK reduction for electric vehicles | -45,000 | -20,000 | -10,000 | |
Taxable OMV | 25,000 | 50,000 | 60,000 | 70,000 |
| | | | |
BIK Rate - Category A | 22.5% | 22.5% | 22.5% | 22.5% |
| | | | |
Cash Equivalent | 5,625 | 11,250 | 13,500 | 15,750 |
Source: KPMG in Ireland
In addition, no taxable benefit arises where an employer provides facilities for the charging of vehicles on its business premises provided all employees can avail themselves of the facilities.
It should also be possible for an employer to reimburse home electricity costs relating to charging the employer-provided EV without tax consequences.