If you decide to purchase a company car the company will receive an invoice for the vehicle and all repayments will be made from the company. No VAT can be claimed back from the Revenue on the purchase of a passenger motor vehicle.
If the car is leased the lease interest will be tax deductible. If a loan is obtained to purchase the car the loan interest equally will be a tax deductible expense. As a car is considered a capital purchase you will be entitled to claim a capital allowance.
The company would be able to pay all the running costs of the car e.g. petrol, insurance, tax and servicing. If the car cost €22,000 or more there is a restriction on the amount that may be claimed by way of expenses. However, you will have to pay tax on the value of the benefit in kind as the car would be available for your private use.
One drawback of a company car is the fact that the company owns the car. If you decide to cease contracting in a few years you will have to purchase the car from the company for its then market value, otherwise you will be taxed on the value of the car as a benefit in kind.
OSK Contracting provide quality and professional business advice to indigenous Irish businesses. Our clients include government bodies; multi-national groups; PLCs; SMEs and sole traders but we specialise in progressive indigenous Irish family owned businesses.
Reprinted with kind permission by OSK Contracting www.osk.ie
Phone: 01 439 4200 East Point Plaza East Point Dublin 3
