EU: tightening up of the provision on the use of company vehicles within the EU

From January 1st, 2014, the provision on the use of company vehicles in the European Union (EU) by employees will be tightened up. This tightening up will particularly affect employees in management positions who are resident in the EU.

In principle, persons resident in the EU are only permitted to use the vehicle of their non-EU resident employer in the EU customs territory under certain conditions. This provision has been interpreted very tolerantly hitherto. Indeed, private use has been accepted as well as, yet not limited to, there having been no consideration of the actual employment relationship of the person driving the vehicle.

However, the company vehicles provisions will be tightened up from January 1st, 2014. The vehicles of non-EU resident which are not, under customs law, registered for the free movement of goods in the EU will be affected. In principle, the use of such vehicles will still only be permitted if the EU resident employee is actually employed by the non-EU resident company. The tightening up means that for an employment relationship to exist under the provision, the employee is required to be remunerated with a sum contractually specified, for which he owes his employer a defined service and who does not possess a significant decision-making competence over the running of the business. For the performance of the said service, a company vehicle can be made available on logistic or efficiency-increasing grounds. The scope of the permitted use of the company vehicle is to be specified in the employment contract. It is preferred that a copy of the said document is to travel in the company vehicle. Moreover, employees in less senior roles are permitted to use the company vehicle for private use.

Henceforth, all other employees no longer qualify as employees within the meaning of the company vehicles provision. For example, this particularly includes those employees in more senior positions such as members of the company's management, the board of directors or the owner of the company due to them owing the company a particular success and who are accordingly authorised with the corresponding decision-making competence. Proof of any work-related journeys with company vehicles requires to be produced. Private use is excluded therefrom.

Shareholders, investors and similar groups of persons are excluded from the provision due to them, in general, not being in operative roles within the company; they are not permitted to use company vehicles in the EU customs territory on which the duty is unpaid.

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