Use of private car for business purposes - company vehicles
If you are the owner of a sole proprietorship or a partner in a shared liability partnership and use a car for business purposes, you may be entitled to deductions for upkeep of the vehicle. There are two models for deductions depending on the type of use: distance travelled and vehicle type.
If you travel less than 6,000 kilometre in your car on business, you can claim a deduction according to a distance-based rate of NOK 3.50 per kilometre. However, you will not be able to claim deductions for other expenses attributable to upkeep of the vehicle.
If you travel more than 6,000 km in your car on business, you must not claim deductions for distance travelled. Instead, you must enter deductions for the actual expenses attributable to the entire upkeep of the vehicle in your accounts. You must also reverse expenses concerning private use of the vehicle (standard rule). It is not a requirement to keep a vehicle logbook concerning your use of your own vehicle on business, but an accurately completed logbook could provide important documentation in the event of any questions concerning the deduction. If you use several vehicles, each vehicle will be considered separately.
If you need a class 2 van for your business, specific deduction rules apply to such vehicles:
You can claim a deduction for actual expenses attributable to upkeep of the vehicle regardless of the distance travelled. Expenses attributable to private use can either be reversed (the standard rule) or alternatively you can recognise income at the rate of NOK 3.40 per kilometre that the vehicle has been used on business. If you choose the latter solution, an electronic vehicle log book documenting the private use must be kept.
Tax ABC on company cars (Norwegian Tax Administration) (in Norwegian only)
Reversal of private use (the standard rule)
Reversal of private use is assessed on the basis of the vehicle's list price. You will be taxed for 30% of the vehicle's list price up to NOK 338,800 (2023) and 20% of the vehicle's list price on any amount over NOK 338,800. The taxable benefit must still not exceed 75% of the calculated total expenses attributable to upkeep of the vehicle. Depreciation of the vehicle must be included in the basis for the calculation (the depreciation rate is 17% of the vehicle's list price as new).
Car prices – List price as new
If there is a business need for a class 2 van, a basic deduction is given where the list price is reduced by 50%, subject to a maximum of NOK 150,000.
For class 2 vans which are more than three years old as of 1 January of the income year, the vehicle's list price as new must be set to 75% before it is reduced by the basic deduction.
If the vehicle is rented or leased, the rent/leasing charge must be included in the total expenses for upkeep of the vehicle, while the depreciation is excluded.
Norwegian Tax Administration on calculating vehicle upkeep costs (in Norwegian only)
Calculating the income supplement for a private car:
The vehicle cost NOK 420,000 when it was purchased new in 2021, and the car's total running costs in 2023 amount to NOK 35,000. The calculated depreciation (17%) is NOK 420,000 x 0.83 x 0.83 x 0.17= NOK 49,188. (Multiplying the amount by 0.83 leads to the value of the vehicle after depreciation for each individual year, and multiplying the amount by 0.17 leads to the depreciation for the current year.)
|Standard supplement||Calculated income supplement|
|NOK 338,800 x 30%||NOK 101,640||Running costs||NOK 35,000|
|(NOK 420,000 - NOK 338,800) x 20%||NOK 16,240||+ depreciation||NOK 49,188|
|-||-||Total expenses||NOK 84,188|
|Calculated private benefit||NOK 117,880||75% of NOK 84,188||NOK 63,141|
The income supplement for private use will be the standard supplement or the calculated income supplement, whichever is lower. In this example, NOK 63,141 must therefore be added to your income.
Calculation of income supplement for class 2 van in the case of a business need for the vehicle:
Basis as for example 1.
Price as new NOK 420,000
The basic deduction (50%, subject to a maximum of NOK 150,000 becomes NOK 150,000).
List price after basic deduction: NOK 270,000.
|Standard supplement||NOK 270,000 x 30% = NOK 81,000||Calculated expenses||NOK 63,141 (identical calculation to that in example 1)|
In this example, NOK 63,141 must therefore be added to your income.