Increase in the private share for business vehicles from January 1, 2022
The implementation of the motion "Fabi. Excessive administrative burden for business vehicle owners" leads to an administrative simplification in the private use of business vehicles, but in return to an additional burden in the form of the increased private share. The corresponding amendment to the Ordinance on the Deduction of Professional Expenses will enter into force on January 1, 2022. The amended provisions may provide an opportunity to review your company's business vehicle practice.
The complications and demarcation issues associated with the introduction of the Fabi provisions had not been foreseen in this way and led to major additional administrative burdens. In particular, the delimitation and declaration issues for field staff are a major nuisance. The problem was soon recognized, so that the Fabi motion was passed in parliament without much resistance, to which the Federal Council responded with the simplification bill that is now being implemented.
Concrete change
The flat-rate private share will be increased from 0.8% to 0.9% per month. This means that from January 1, 2022, 10.8 percent of the purchase value of a business vehicle will be charged as a private share instead of the previous 9.6 percent.
In contrast to previous practice, unpaid commuting costs are already included in the annual private share of 10.8%. However, it is still possible to deduct the actual travel costs, in which case a mileage logbook must be provided as proof for the tax return.
Effects for employers
For employers with field service employees, the change in practice primarily means an administrative simplification in the handling of privately used business vehicles. For example, in future employers will not have to provide information on the proportion of field service on employees' salary statements and therefore do not have to laboriously calculate this. These simplifications speak strongly in favor of the new flat-rate solution.
In terms of costs, the increase in the private share has an impact on employers in that their social security and VAT contributions increase minimally.
Effects for employees
For employees, the increase in the private share has an impact on taxable income and therefore on their tax burden, and also results in higher social security contributions. As the higher private share now covers the unpaid journey to work (in a company vehicle), the Fabi corrections in the tax return are no longer necessary.
Instead of the flat-rate billing of the private share, the actual billing can still be applied in future. This results in different advantages and disadvantages depending on the employee's situation. These are illustrated in the following calculation examples.
What still applies until the end of 2021?
Up to and including the 2021 tax period, employees will be charged 0.8% per month for private use. If they also use the vehicle free of charge for their commute, this must be taxed as other income from Fabi (70 centimes per kilometer of commute).
Effect of the change from January 1, 2022
Employees with a long commute benefit from the new flat-rate regulation. People with a short commute, on the other hand, will be charged more. In this case, the more administratively complex effective accounting with a logbook is worthwhile at best.
The effects at cantonal level may vary due to the current differences in the amount of the travel expense deduction.
Calculation example: old and new practice (2021 and 2022)
The employer provides Ms. Greppi with a company car free of charge, which she can use both for her commute to work and for other private purposes. She travels 20 kilometers per day between home and work (short commute). She is charged a monthly flat-rate private share of 0.8% or 0.9% of the original purchase value of the vehicle (CHF 50,000).
The tax consequences differ considerably depending on the length of the commute. This is illustrated by another example with a long commute:
Mr. Wartenweiler is also allowed to use a company car for private purposes. The initial situation is the same as for Ms. Greppi, with the difference that his commute to work is significantly longer at 50 kilometers, i.e. 100 kilometers per day. He does not work in the field.
