If your company provides you with a car, the taxable benefit (BIK) depends on the Original Market Value (OMV) and how many business kilometres you drive each year.
The cash equivalent is a percentage of the OMV, ranging from 6% (over 48,000 business km) to 30% (under 24,000 business km). This amount is added to your income for tax purposes, meaning you pay income tax, USC, and PRSI on it.
Electric vehicles receive a reduction in the OMV used for BIK calculation. The reduction varies by year. Check Revenue for the current reduction amount, as it changes frequently.
You must keep a contemporaneous log of business kilometres driven. Without adequate records, Revenue will apply the highest BIK rate.
| Annual Business km | BIK % of OMV |
|---|---|
| Under 24,000 km | 30% |
| 24,001 to 32,000 km | 24% |
| 32,001 to 40,000 km | 18% |
| 40,001 to 48,000 km | 12% |
| Over 48,000 km | 6% |
A director has a company car with an Original Market Value of EUR 45,000 and drives 26,000 business kilometres per year. The BIK band is 24%. Taxable BIK = EUR 45,000 x 24% = EUR 10,800. At a marginal tax rate of 40% plus USC and PRSI, the tax cost of this BIK is approximately EUR 5,400 per year.
For high-mileage drivers (over 48,000 km), the BIK rate drops to just 6%, making a company car very tax-efficient. For low-mileage drivers, the 30% rate often makes it cheaper to own the car personally and claim business mileage at civil service rates. Run both scenarios before deciding.
If you return the company car, the BIK stops immediately. Some directors take a car allowance instead and buy their own car, claiming mileage expenses. The right approach depends on your annual business kilometres, the car value, and your personal tax rate.
Disclaimer: This information reflects the 2026 tax year. Tax rules change annually following the Budget. Check Revenue.ie for the latest rates and thresholds. This guide is for informational purposes only and does not constitute tax advice.