Dáil Éireann Debate, Tuesday - 25 July 2023
311. Deputy Michael Ring asked the Minister for Finance to detail the mechanism by which 'brand ambassadors' who receive vehicles from motor companies can pay benefit-in-kind when they are not on the payroll of these companies, have no employment status with these companies and cannot record an annual mileage in performing their duties for these same companies. [36153/23]
View answer312. Deputy Michael Ring asked the Minister for Finance if a 'brand ambassador' for a motor company has a benefit-in-kind liability if he/she has a vehicle on lease from the company at well below the market rate; and if he will outline the steps he is taking to ensure that there is a fair application of this benefit-in-kind to all taxpayers. [36154/23]
View answerI propose to take Questions Nos. 311 and 312 together.
I am advised by Revenue that the tax treatment regarding the provision of a vehicle to an individual depends on a number of factors, including:
• the employment status of the individual;
• the nature of the benefit received (including in the case of a vehicle, whether ownership is transferred to the individual); and
• the circumstances under which the benefit is provided.
Employer provided vehicles
Sections 121 and 121A of the Taxes Consolidation Act 1997 provides that where a car or a van is made available for the private use of an employee then the employee is chargeable to benefit in kind tax (BIK), this applies whether the vehicle is owned by the employer or leased.
A vehicle is regarded as being made available to an individual by reason of his or her employment if it is made available to them by his or her employer (or a person connected with the employer).
Where such a benefit is provided for an employee by his or her employer, the employer is required to include that notional payment as part of the employee’s emoluments and to deduct tax via the PAYE system accordingly.
From 1 January 2023 the cash equivalent of the use of a car for the purpose of calculating the amount taxable as a BIK is determined by the car’s original market value (OMV), the annual business kilometres driven and the CO2 emissions category of the car. The latter determines whether a standard, discounted, or surcharge rate applies. In addition, the Deputy should note that Finance Act 2023 introduced a temporary measure for the year of assessment 2023, which provides for a €10,000 reduction to be applied to the OMV of cars in Category A, B, C and D for 2023 (it does not apply to cars in Category E).
Vehicles provided by reason of employment by Third Parties
If an individual has, by reason of his or her employment, a vehicle available for his or her private use, a taxable BIK arises even if the person providing the vehicle is not the individual’s employer.
In such circumstances, it is broadly the third party who provided the benefit that is responsible for accounting for the PAYE, PRSI and USC on same via the PAYE system.
However, the facts, circumstances, arrangements etc. relating to the benefit must be examined before the correct tax treatment can be determined in each case.
Vehicles provided otherwise than in the capacity of employee
Where an individual is provided with the use of a vehicle, otherwise than in their capacity as an employee, and in circumstances where the individual agrees to provide a service, such as involving the promotion and marketing of the particular car brand, the individual will, depending on the particular facts and circumstances, be subject to tax under either Schedule D Case I/II or Case IV.
If the service is provided in the carrying on of a trade/profession, a charge to tax under Case I/II will apply. A charge to tax under Case IV will apply in circumstances where the service is carried on otherwise than in the course of a trade. The taxable amount in each case would generally be based on a fair value of the use of the car.
Application of tax
I am advised by Revenue that the collection of tax is based on a self-assessed system, as such it is the responsibility of each taxpayer to ensure they comply with their tax payment and filing obligations.
As part of its Compliance Intervention Framework Revenue monitors tax compliance on an ongoing basis, using a proportionate and focused approach to identify and respond to risks.
I am advised by Revenue that further information on the taxation of employer-provided vehicles is available on Revenue’s website, which is available at the following links:
• www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01b.pdf.
• www.revenue.ie/en/employing-people/benefit-in-kind-for-employers/private-use-companycars/index.aspx.
Finally, further information on the provision of third-party benefits to employees can be found in Tax and Duty Manual Part 05-01-01m, which is available at the following link:
• www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-05/05-01-01m.pdf.
