Employers’ perspective on plug-in hybrid vehicles
Until recently, Czech tax and labour-law legislation lacked any regulation of plug-in hybrid vehicles. If employers provided such vehicles to their employees for both business and private purposes, the determination of the employee’s non-monetary income relating to fuel consumed on private trips was problematic, along with several other issues. This topic was discussed by the Coordination Committee of the Chamber of Tax Advisors and the General Financial Directorate (GFD).
Plug-in hybrid vehicles have both an electric and a combustion engine; switching between individual activating systems is automatic and the battery is recharged by the transformation of kinetic energy to electricity (i.e. recovery). If the employee uses a vehicle for private purposes and its battery is partially or fully recharged during this trip using electricity that is then consumed during a business trip, the question arises whether a non-monetary benefit arises to the employer. The GFD agreed that if the battery was recharged in this manner, no taxable gratuitous income arises to the employer.
The committee also dealt with the issue of determining the amount of non-monetary income from employment relating to fuel consumed by an employee for private purposes. The GFD confirmed that the price of electricity can be determined using the weighted average of purchase prices included in receipts submitted by the employee to the employer. If the employee recharges the vehicle using their own electricity grid, the price for which the battery has been recharged must be sufficiently documented. A recharge from the employee’s own electricity grid does not constitute an economic activity from the VAT Act perspective. In the GFD’s opinion, it is also possible to apply the average price of 1 kWh of electricity of CZK 4.80, published in the Ministry of Labour and Social Affairs’ decree regulating the compensation of travel expenses on domestic business trips.
The committee also discussed how to determine the amount of consumed fuel. Data that can now be ascertained from a vehicle’s on-board computer are very limited. The amount of consumed electricity can be determined as a multiple of the total volume of consumed electricity in a calendar month and the ratio of private and business trip mileage for a given calendar month. Individual trips must be recorded using a journey log in a thorough and provable manner. If a more exact method is available to determine the amount of consumed fuel/electricity (due to the vehicle’s facilities), the data ascertained using this method must be used.