Diana Šalomskienė, Senior Advisor of the VMI Control Department, told 15min that legal acts do not prohibit an employer from allowing an employee to use a company car for personal purposes, for example, to go to the seaside on a weekend.
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However, such permission usually means additional tax obligations.
“The benefit received by the employee is usually considered income in kind, which must be properly assessed, declared and taxed in accordance with the procedure established in the Law on Personal Income Tax,” D. Šalomskienė told 15min.
However, she also noted that not every case where an employee drives a company car after work automatically means income in kind. If the car is left to the employee only for the performance of work functions and is not provided for personal needs, no additional taxes arise.
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“All factual circumstances are assessed: work functions, internal procedures, real need and actual use of the car,” explained the VMI representative.
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