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Benefits from a company comprehensive insurance for employees
Mileage allowance reimburses the costs of using a private car for work purposes. If the employer also covers private costs or risks, this can give rise to a taxable benefit for the employee.
A company employed staff who used their private cars for business‑related journeys. For this they received mileage allowance from the employer. In addition the employer offered the employees benefits from a comprehensive insurance (Kaskoversicherung) for the distances driven for business. This insurance cover could be extended to private journeys for an additional contribution of EUR 100 per year. If an accident occurred on a business trip and a deductible had to be paid, the employer also covered this.
The tax administration concluded that the comprehensive insurance taken over by the employer and the paid deductibles must be treated as a benefit arising from the employment relationship for tax purposes. The company argued that this was merely a safeguard to avoid liability for compensation towards the employee.
Decision of the Federal Fiscal Court (BFG) and the Administrative Court (VwGH)
Both the Federal Fiscal Court (BFG) and the Administrative Court (VwGH) upheld the tax office’s view. The relevant point is the distinction between reimbursement of business travel costs (mileage allowance) and the additional benefit for the employee arising from the comprehensive insurance or the paid deductible. The mileage allowance is intended to cover the costs incurred by the employee because he uses his private vehicle for the employer. Payments made by the employer beyond that can constitute an additional benefit for the employee and are therefore taxable for him.
The insurance premiums paid by the employer do not constitute a taxable benefit for the employees. The decisive factor here is that the employer was the policyholder and alone held the rights under the insurance. The employees therefore did not receive a personal benefit simply by the payment of the premium.
It was different with the benefits in the event of a loss. When the employer covers damage to the employee’s private car, the employee is economically relieved. Consequently this gives rise to a taxable employment income. This also applies when the accident occurs during a business trip.
Tip: In the area of payroll accounting there are regularly topics and questions that can have long‑term tax implications, including potential payroll tax liabilities. Comprehensive and timely advice is therefore essential, especially in this sensitive area.
The tax administration concluded that the comprehensive insurance taken over by the employer and the paid deductibles must be treated as a benefit arising from the employment relationship for tax purposes. The company argued that this was merely a safeguard to avoid liability for compensation towards the employee.
Decision of the Federal Fiscal Court (BFG) and the Administrative Court (VwGH)
Both the Federal Fiscal Court (BFG) and the Administrative Court (VwGH) upheld the tax office’s view. The relevant point is the distinction between reimbursement of business travel costs (mileage allowance) and the additional benefit for the employee arising from the comprehensive insurance or the paid deductible. The mileage allowance is intended to cover the costs incurred by the employee because he uses his private vehicle for the employer. Payments made by the employer beyond that can constitute an additional benefit for the employee and are therefore taxable for him.
The insurance premiums paid by the employer do not constitute a taxable benefit for the employees. The decisive factor here is that the employer was the policyholder and alone held the rights under the insurance. The employees therefore did not receive a personal benefit simply by the payment of the premium.
It was different with the benefits in the event of a loss. When the employer covers damage to the employee’s private car, the employee is economically relieved. Consequently this gives rise to a taxable employment income. This also applies when the accident occurs during a business trip.
Tip: In the area of payroll accounting there are regularly topics and questions that can have long‑term tax implications, including potential payroll tax liabilities. Comprehensive and timely advice is therefore essential, especially in this sensitive area.