How to reverse some of your car expenses if your company car is also used for private purposes

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If your company car has also been used for private purposes, you must reduce the expenses by performing a reversal for the private use. Below you can read about the two standard rules which you use to calculate the amount which you should reverse.

You select the standard rule which gives you the lowest amount to declare in the income statement and, where applicable, RF-1125. However, you should be aware that the standard rules do not apply to all types of vehicle which have been used for private purposes. You can read about these exceptions below.

If you submit RF-1175 Income statement 1, you must use item 7099 to reverse the standard amount. If you are obliged to submit RF-1125, you must enter the standard amount under item 27 in the form. When you have calculated the standard amount for private use, enter the amount in your accounts. You post the same figure 

  • credit on the account which you transfer to the profit and loss account and 
  • debit on the private account which you subsequently enter under item 2075 in form RF-1175. 

Standard rule 1 for calculating what you should reverse for private use of a company car

To calculate the amount, you must know the list price of your company car as new. You should reverse 30% of the list price up to a certain limit. This limit is determined by the Directorate of Taxes towards the end of the income year. At the bottom of this web page, you can find the relevant limit by entering the appropriate income year in the field. If the list price of your car was above the limit, you should calculate the amount as follows:

  1. Calculate 30% of the limit
  2. Then calculate how much higher than the limit the list price was. Then calculate 20% of the difference.
  3. Add together the two numbers you arrived at. 

In some cases, you must first  reduce the list price of the car proportionately before you perform the calculation described above:

  • If you can substantiate that your business-related use of the car during the income year concerned exceeded 40,000km, you should reduce the list price by 25% 
  • If the car was first registered more than three years before 1 January of the income year, you should reduce the list price by 25%. 
  • If you have an electric car (does not apply to hybrid vehicles), you should reduce the list price by 50%.

A few taxpayers fulfil a number of these conditions. If the car was first registered more than three years before 1 January of the income year and you can also substantiate that the business-related use of the car exceeded 40,000km in the income year concerned, you should use just 56.25% of the list price in the calculation. If you have an electric car that was first registered more than three years before 1 January of the income year, you should reduce the list price by just 37.5%.

For vehicles in class 2 and trucks under 7 500 kg, there are special rules, see here.

Standard rule 2 for calculating what you should reverse for private use of a company car.

If you use this rule instead of standard rule 1, you reverse 75% of the basis from item 27 in form RF-1125. The basis includes the running costs of the car concerned, such as road tax, fuel, insurance and servicing/repair costs. If you lease the vehicle, you should include the leasing cost as debt for the year. However, if you own the vehicle yourself, instead of the leasing cost, you should take into account depreciation; see below.

The depreciation is determined using a different balance depreciation than the one you claimed in item 110 of form RF-1084 Avskriving (Depreciation - in Norwegian only) and item 25 of form RF-1125. Instead, you should use the list price of the car when it was first registered as a basis. For each year from the year of registration onwards, you should deduct 17% of the underlying balance from the previous year.

If you have purchased or sold the car during the income year, you must reduce the depreciation proportionately for the income year relative to the number of days. This also applies if the car ceased to be a company car for you during the income year concerned.

Example of how to calculate the depreciation

A taxpayer purchases a used car on 1 April of the income year. The car had a list price of NOK 300,000 when it was first registered during the previous summer. The basis for calculating the balance depreciation for the year of purchase: NOK 300,000 x (100% - 17%) = NOK 249,000Depreciation for the full purchase year: NOK 249,000 x 17% = NOK 42,330Depreciation from 1 April to 31 December: NOK 42,330 x 275 days / 365 days = NOK 31,892

Exceptions where you cannot use the standard rules for reversals for the private use of a company car

You can read about how you use the standard rules for reversals above. However, the standard rules do not apply to:

  • Lorries with a gross weight of 7,500kg or more 
  • Buses with more than 15 passenger seats 
  • Cars which are prohibited by law from being used for private purposes except for travel between the home and the workplace.

If you have such a company car, you must calculate the number of kilometres that you have travelled in the car between your home and your permanent workplace, home visits and other private travel.

Multiply the total distance travelled by a standard distance-based rate to determine the amount which you must reverse. However, you should be aware if during the year the car was used for more than 4,000km for travel between home and a permanent workplace and/or for home visits. In this case, you must perform the calculation for the excess distance during such use using a lower distance-based rate.

The two rates that you should use can be found in Section 1-2-15 final paragraph of the standard valuation rules for the income year concerned. The Directorate of Taxes establishes these rules towards the end of the income year. See the rates for company cars for more information.

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