Company Car Scheme - An attractive employee benefit in Denmark

In Denmark, it is common for companies to offer benefits as part of the employment package to attract and retain talented employees. One of the most popular benefits is a free car scheme, or a so-called company car, where the employee is provided with a car by the company. However, this scheme comes with tax implications that both the employer and the employee need to be aware of.

What is a company car or free car scheme?

A free car scheme means that an employee is provided with a company car by their employer. A company car can be used for both business and private purposes, which makes the scheme particularly attractive to many employees. The employer typically covers the cost of the car purchase, leasing, maintenance, insurance and fuel.

Taxation of free car

When an employee is provided with a company car, this is considered a taxable employee benefit. Taxation of a company car is based on certain rules, where the value of each company car is determined based on the car's purchase price.

Pct.Until 1 July 20211 July 2021 to 31 December 20212022202320242025
Rate for car value under 300,000 DKK.2024,52423,52322,5
Rate for car value over DKK 300,000.2020,52121,52222,5
Environmental supplement150250350450600700

Recent years have seen a phasing in of new taxation rules, with the last change in January 2025. Here is an overview of how the taxation percentage has evolved since 2021, as well as the current rates for car value taxation and the environmental supplement.

Employer obligations

The employer also has certain administrative tasks related to a company car. These include correct reporting to SKAT, calculating the employee's taxable value of the car and any corrections during the year if the car's use changes.

Pros and cons of a company car

Benefits:

  • Employees can enjoy the benefits of a newer, well-maintained car without having to make the purchase themselves.
  • Attractive employee benefits that can improve employee satisfaction and retention.

Disadvantages:

  • Increased administrative burdens for the employer.
  • Tax consequences for the employee that may affect the net salary.

A free car scheme can be an attractive employee benefit for both employees and employers. However, it's important to be aware of the tax consequences and administrative tasks that come with it.

For more information about taxation of free cars, please visit SKAT's website.

Call me back

Find out more about how we help create Increased bottom line through optimised payroll processes.

Yes please, I would like to receive a call.

  • By submitting this form, you agree to the processing of your data in accordance with our privacy policy.
  • This field is for validation purposes and should be left unchanged.

Scroll to Top