How exactly should you declare your car on your tax return? Do you have a private car? Or a company car? In this post, we give you some hints on taxation as we know it.
We would like to point out that we disclose the following information without any claim to completeness and accuracy and that it is not intended to replace tax advice. A fiduciary or tax advisor can give you the best possible advice regarding your personal tax situation and the applicable regulations, which differ from canton to canton.
The private car
A personal car, like other property, must be declared as an asset on the tax return. You must declare your vehicle at its current market value. The current market value is the value you could get if you sold your car. If you don't know its value and you want to save yourself a yearly reappraisal of your car, use the depreciation percentage provided by your canton. You can apply it to your car and its years of wear and tear. As a general rule, a newly purchased car loses an average of 30% of its value in the first year. Some cars no longer lose value over time, and their value may even increase. This is the case with vintage or classic cars, for example. In these cases, it is of course necessary to adjust your tax return accordingly and indicate the real value of the car’s assets.
Deductions for the commute
In principle, only public transport costs can be deducted. However, people who take much longer to get to work by public transport rather than by car can also deduct the costs of their own travel. The cantons themselves decide which conditions apply.
The following provisions apply to private cars. In the case of direct federal tax, the deduction is 70 centimes per kilometre driven to work. For example, the following scale applies for cantonal and municipal taxes in the canton of Thurgau:
- 0 - 3'000 kilometres = 60 centimes per kilometre
- 3'001 - 5'000 kilometres = 50 centimes per kilometre
- 5'001 kilometres or more = 40 centimes per kilometre
For example, anyone who travels 6,000 kilometres to work each year can deduct CHF 3,200 in cantonal and municipal taxes. CHF 4,200 can be deducted for direct federal taxes.
The deduction of travel expenses is limited to a maximum of CHF 6,000 for cantonal and communal taxes. For direct federal tax, the maximum deduction is CHF 3'000. No deductions may be made above this amount.
If you are allowed to use your company car for private purposes, it is called a mixed-use company car. Private use is calculated as a so-called monetary benefit and must be reported on your tax return, as it represents income.
Private use of the company car as a wage component
If a company car is made available to you as you depend on it, you will be charged a private share of 0.8% of the purchase price per month (equivalent to 9.6% per year) as a salary for private use.
Calculation example: purchase price of the car = CHF 50'000.
- 9.6% of 50'000 = CHF 4'800. This is an additional wage that you must declare on your tax return. This amount is shown in point 2.2 of your salary statement.
No private use
If you drive a company car, which carries permanently installed equipment, e.g. for transporting tools, and private use is therefore considerably restricted, no contribution is required from you. The same applies to business cars, which you are not allowed to use for private purposes and are only intended for commute.
Use of the company car for commute as a wage component
It costs 70 centimes for every kilometre travelled from home to work. A total of 220 working days generally represents a full-time job over a year.. If you only have a part-time job, the number of working days is naturally lower.
Calculation example for full-time and part-time work with a distance of 15 km from home and work:
- Full time: 220 days x ( 2 x 15km) x CHF 0.70 = CHF 4620
- Part time: 220 x 80% = 176 days x (2 x 15km) x CHF 0.70 = CHF 3696
One portion should be reported as income and another portion may be credited as commuting expenses. Each canton decides individually on the number of kilometres that can be deducted.
If you work in the field, only the days you drove a company car from your place of residence to your usual place of work should be taken into account for the calculation of the payment in kind. Your employer certifies the percentage share you paid as a field service employee on your payslip (para. 15).
Example: Full time, 30% field service and 20 km distance from home and work
220 - (220 x 30%) = 154 days x (2 x 20 km) x CHF 0.70 = CHF 4312
The amount must be reported as income on the tax return.
Conclusion - cost comparison
Driving a private car or a company car leads to tax differences. On your tax return, you either declare your private car or the so-called monetary value of the company car, which is income.
- Directives of the Cantonal Tax Office of the Canton of Zurich on the calculation of income in kind from the use of a company car for private journeys for dependent employees and the private share of the car costs for self-employed persons
- Depreciation percentage of the cantons
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