Why do we have to calculate a private share?
The calculation of the private vehicle share is necessary to determine the value of the services provided by the employer to the employee in return for payment (free of charge), in this case the use of a company car for private purposes.
The use of a company car outside the professional context constitutes an appreciable cash benefit and is therefore taxable as income.
The private portion must be indicated under figure 2.2 of the employee's salary certificate. The private portion must be considered in the taxable salary of employees affected by withholding tax.
The private portion is also subject to VAT if the company is a taxable person. This is because the company can reclaim VAT on vehicle-related expenses.
How do you calculate the private vehicle share?
There are two ways of calculating the private portion: flat-rate or actual.
Effective method
The effective method is an approach based on actual data to determine the private share of a vehicle. By using this method you undertake to keep a logbook to record each use of the vehicle, both private and professional, mentioning in particular: date, destination, driver's name, reasons for the journey. All this should be recorded in a reliable, unalterable format (such as a notebook) so that you can justify your journeys in the event of an inspection.
The fee per kilometre is CHF 0.70.
Using the actual method to calculate the private portion of the vehicle will certainly be more accurate, but it will require more effort in terms of documentation and monitoring.
Examples of calculations for the private vehicle share - Effective method
Un employé à selon le tableau de suivi parcourus pour une utilisation à titre privé : 4’200 km.
- Flat rate per kilometre = CHF 0.70
- 70 CHF x 4'200 CHF = 2'940 CHF
Le montant à indiquer dans le certificat de salaire serait de 2’940 CHF.
Flat-rate method
The flat-rate method is a simplified approach to calculating the private portion of a vehicle by using a flat rate of 0.9% of the vehicle's purchase price excluding tax. However, the private share of the vehicle cannot be less than 150 francs per month.
The main advantage of this method is its simplicity. It avoids the need to keep detailed travel records.
Examples of calculations for the private vehicle share - flat-rate method
Exemple 1 :
For a vehicle with a purchase price of CHF 43,000 (excluding VAT) :
- 0.9% per month = CHF 387 per month
- Amount of private share (12 x 387) = CHF 4,644
The amount to be shown on the salary certificate would be CHF 4,644.
Example 2
For a vehicle with a purchase price of CHF 15,000 (excluding VAT) :
- 0.9% per month = CHF 135 per month
- Montant de la part privée (12 x 120) = 1'440 CHF
However, as the monthly amount calculated at the rate of 0.9% is less than CHF 150, the minimum amount of CHF 150 per month or CHF 1,800 applies.
- Montant de la part privée (12 * 150) = 1'800 CHF
Le montant à indiquer dans le certificat de salaire serait de 1’800 CHF.
Private share luxury vehicle
When a vehicle used for professional purposes has features of comfort or power above what is generally necessary for a profession, it is perceived as a "luxury vehicle" for personal reasons.
This applies both to the initial cost of the vehicle and to its maintenance costs (such as insurance, repairs, petrol, etc.).
A vehicle is considered "luxury" if the purchase price exceeds CHF 100,000 excluding VAT, unless there are specifically justified exceptions.
For these vehicles, any amount in excess of this threshold is considered to be expenditure for personal enjoyment and will therefore be taxed accordingly.
Since the vehicle remains linked to the company, it is the value of the use of the portion considered "luxury" that is seen as a private benefit. To simplify, the value of this "luxury" portion is spread over 5 years. For leased vehicles, this breakdown is based on the term of the contract.
Applicable rates private share luxury vehicle
- 0.9% par mois du prix d’achat pour la tranche allant de 0 à 100'000 CHF
- 20% par an de la part du prix d’achat excédant les 100'000 CHF répartie sur 5 ans
- 0.4% par mois supplémentaires pour la part excédent les 100'000 CHF
Example of calculation of private share of luxury vehicle
For a vehicle with a purchase price of CHF 150,000 (excluding VAT) :
5 premières années :
- 100'000 CHF x 10.8% (0,9% x 12 mois) = 10'800 CHF de part privée
- 50'000 CHF x 20% = 10'000 CHF part privée sur le prix d’achat « luxe »
- 50'000 CHF x 4.8% (0.4% x 12 mois) = 2'400 CHF de part privée supplémentaire
The total private share for each year over the first 5 years would be CHF 23,200.
Dès la 6nd année :
- 100'000 CHF x 10.8% (0,9% x 12 mois) = 10'800 CHF de part privée
- 50'000 CHF x 4.8% (0.4% x 12 mois) = 2'400 CHF de part privée supplémentaire
The total private share from the 6thyear would be CHF13,200.
Private share of vehicle and VAT
If the employer is subject to VAT, he will have to make a correction in his VAT statement to take account of this private portion.
In fact, the employer recovers VAT on vehicle-related expenses and these expenses are fully admissible provided that they are for business purposes. As the private portion is precisely the opposite, a correction must be made.
For further information: info TVA 08
Calculation of private share of VAT
The private share according to the methods explained above is considered inclusive of all taxes.
Calculation year 2023 :
- Part privée calculée = 2'500 CHF
- (2,500/107.7)*7.7 = CHF 178.75 VAT payable
Calculation year 2024 :
- Part privée calculée = 2'500 CHF
- (2’500/108.1)*8.1 = 187.30 CHF de TVA à payer
VAT statement and private share
Actual count
VAT on the private share of the vehicle for independent persons (individualraison) must be reported under figure 415 of the VAT statement. VAT on the private portion for legal entities is to be reported as turnover under figure 200 of the VAT statement.
For further information: TVA Suisse l’essentiel
Deduction according to the net tax debt rate (TDFN)
The private share of the owner of a sole proprietorship is already taken into account when applying the net tax liability rates. Legal entities must declare the private share as turnover in figure 200 of the VAT statement, applying the rate granted. If two rates are available, the higher rate should be used.
For further information: Net tax debt rate (VAT) : What is it?
Conclusion
The private portion of a vehicle is certainly one of the most overlooked items when it comes to VAT in Switzerland. A mistake made over a number of years can be costly in the long run, not least because of the interest charged on the amount due.
That's why all our accountancy services also benefit from our tax expertise.
The Fidulex team will be happy to discuss your needs with you.
FAQ - Vehicle private share
It is possible not to have to calculate a private share when the vehicle is used solely for business purposes, but it is advisable to keep a logbook to justify journeys.
It is also possible not to calculate a private share if the vehicle is a commercial vehicle.
The rate is 0.9% per month, 10.8% per year.
- 0.9% per month of the purchase price from CHF 0 to CHF 100,000
- 20% per annum of the portion of the purchase price exceeding CHF 100,000, spread over 5 years
- 0.4% per month for the portion in excess of CHF 100,000
Private use of a company car is taxed as income. The amount of the private portion must be shown in section 2.2 of the salary certificate.
The minimum monthly amount is 150 francs, i.e. CHF 1,800.
In principle, the chosen method must be maintained. A change is only possible if the vehicle is changed.
