The business owner's manual for vehicle taxation. Master the intersection of Registration Tax (VRT) and Benefit-in-Kind (BIK) for a tax-efficient 2026 fleet.
Yes, company cars pay VRT at the same rates as private vehicles. VRT is based on the Open Market Selling Price (OMSP) and CO₂ emissions. While VRT is a once-off registration tax, it directly impacts the Benefit-in-Kind (BIK) calculation, as BIK is derived from the OMSP. Lower VRT often means a lower OMSP, which reduces the employee's BIK liability.
When an employee uses a company car for private use, they pay Benefit-in-Kind (BIK). This is not a tax on the company, but on the employee's income.
Example: A €40,000 OMSP car at a 22.5% BIK rate creates a taxable benefit of €9,000 annually. This is added to your salary for PAYE/PRSI/USC purposes.
The Irish government continues to incentivize EVs by reducing the "assessed value" for BIK purposes.
Deducted from the OMSP before applying the BIK rate.
Electricity provided at work for EVs is not a taxable benefit.
Installation costs can often be recovered tax-free by companies.
Since 2023, BIK is calculated based on BOTH business mileage AND the car's CO₂ emissions. There are five categories (A to E):
| CO2 Category | Emission Range (WLTP) | Base BIK Rate |
|---|---|---|
| Category A | 0g/km (Pure EV) | 9.00% to 22.50% |
| Category B | 1g/km to 59g/km | 12.00% to 30.00% |
| Category C | 60g/km to 99g/km | 15.00% to 37.50% |
| Category D | 100g/km to 139g/km | 22.50% to 37.50% |
| Category E | 140g/km + | 37.50% (Locked) |
"For 2026, a temporary reduction of €10,000 applies to the OMSP of cars in Categories A, B, C, and D. If your company car has an OMSP of €45,000, you are only taxed on €35,000. For an EV already benefiting from the €35,000 threshold, this stacks, potentially providing a €45,000 total reduction in taxable value."
For businesses that don't require passenger seating (e.g., couriers, tradespeople, or technicians), registering a vehicle as Category C is a major tax play.
Unlike cars (7-41%), heavy commercials (over 3,500kg) pay a flat €200 VRT fee. Many large electric vans also qualify for this rate, making them double-efficient for fleet owners.
"Commercial means business. Rear seats usually void this status, moving the vehicle to Cat A or B with significantly higher VRT."
Revenue rewards employees who drive more for business by lowering the BIK percentage rate.
| Annual Business KM | BIK Rate Example (CO2 Band C) |
|---|---|
| 0 – 26,000 km | 30% (Max) |
| 26,001 – 39,000 km | 22.5% |
| 39,001 – 52,000 km | 15% |
| 52,001+ km | 9% (Min) |
Revenue auditors look for inconsistencies in 'Personal Use' claims. Keeping a clean paper trail is mandatory for businesses.
Detailed daily trip logs (Date, Purpose, Distance) for business vs private usage.
Verification of fuel usage against logged business mileage.
Proof of company ownership (or lease agreement) showing CO2 bands.
Declarations for Pooled Vehicles (vans kept at work) where zero private use occurs.
For VRT purposes, company cars are treated the same as privately owned cars. The difference for businesses appears later via Benefit-in-Kind (BIK) rules, which determine the taxable value of any private use of a company car by an employee or director. BIK does not alter the VRT due at registration.
The following are illustrative examples using simplified assumptions. Actual rates, reliefs and OMSP are determined by Revenue at the time of registration.
Note: Post-Brexit, customs/VAT may also apply when importing from Great Britain. These are separate from VRT and depend on origin and import documentation.
Note: EV reliefs are time-limited and subject to caps/thresholds. Check current Revenue guidance at registration.
No. Company cars follow the same VRT rules as private cars. VRT is based on Revenue’s OMSP and the WLTP CO₂ band. BIK is separate.
VRT is generally not reclaimable. It becomes part of the vehicle’s cost. Discuss capital allowances and treatment with your accountant.
BIK does not change VRT. It applies after registration to assess the value of any personal use by an employee or director.
EVs may qualify for VRT reliefs subject to caps and current policy. Always confirm latest Revenue guidance before registering.
Often, yes. Customs/VAT can arise on import from Great Britain, and VRT is payable on registration. Each is assessed under separate rules.
Book an NCTS VRT appointment and bring ID, company details, vehicle documents (V5C/CoC/invoice), customs evidence if relevant, and payment.
VIN, make/model/trim, WLTP CO₂ figure, first registration date, mileage, and purchase invoice help Revenue determine OMSP and the correct band.
No, VRT is not refundable upon resale within Ireland. However, if the car is permanently exported, you may be able to claim a partial refund via the Export Repayment Scheme.
Generally no. VRT is based on the vehicle classification (e.g., passenger vs. commercial). Signwriting doesn't change a car (Cat A) into a commercial vehicle (Cat B/C) unless significant structural changes are also made.
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