- The flat €45,000 EV exemption from BIK was phased down — for 2025 the EV relief reduces the original market value by €20,000 before calculating BIK
- BIK on all cars is now calculated using a CO2-based rate table, meaning petrol and diesel cars attract significantly higher rates than EVs
- An employee driving an EV company car worth €55,000 can still pay substantially less BIK than an equivalent petrol car
Company car tax — or Benefit-in-Kind (BIK) — was completely overhauled in Ireland in 2023, moving from a system based purely on business mileage to one based on the CO2 emissions of the vehicle. Electric vehicles were originally given a generous exemption, but this is being phased down over 2023–2025. If you drive a company car, understanding the current rules is essential for your payslip.
What Is Benefit-in-Kind on a Company Car?
If your employer provides you with a company car that you also use for personal journeys (including commuting), Revenue treats the personal use as a taxable benefit. The value of this benefit — the Benefit-in-Kind (BIK) — is added to your salary and taxed as income.
BIK is not a separate tax. It's treated as employment income, so you pay income tax, USC, and PRSI on it at your normal marginal rates. The BIK amount itself is added to your P60 and reflected in your total income for the year.
How Is Company Car BIK Calculated?
Since 2023, the BIK calculation has two components:
1. Original Market Value (OMV) This is the list price of the car when new, including VAT and VRT. It's fixed for the life of the vehicle.
2. BIK Rate (based on CO2 emissions) Revenue assigns each car a BIK rate based on its CO2 emissions category. Higher emissions = higher BIK rate. Rates range from 9% to 37.5%.
| CO2 Category | Emissions (g/km) | BIK Rate |
|---|---|---|
| A (EV / zero emission) | 0 | 9% |
| B | 1–50 | 12% |
| C | 51–120 | 15% |
| D | 121–160 | 20% |
| E | 161–192 | 25% |
| F | 193–226 | 30% |
| G | 227+ | 37.5% |
Formula: BIK = OMV × BIK Rate
For an EV with an OMV of €55,000: BIK = €55,000 × 9% = €4,950 per year
For a petrol car with the same OMV and CO2 in Category E: BIK = €55,000 × 25% = €13,750 per year
The EV BIK Relief: What's Left in 2025?
When the new CO2-based system launched in 2023, Revenue introduced a temporary transitional relief for electric vehicles. The original flat €45,000 reduction from OMV was generous — meaning EVs with an OMV under €45,000 paid zero BIK. This has been phased down:
| Year | EV OMV Reduction |
|---|---|
| 2023 | €35,000 |
| 2024 | €20,000 |
| 2025 | €10,000 |
| 2026 | Nil (no reduction) |
For 2025, Revenue reduces the OMV of an EV by €10,000 before applying the BIK rate.
Example: EV with OMV of €55,000 in 2025
| Amount | |
|---|---|
| OMV | €55,000 |
| Less EV reduction | –€10,000 |
| Adjusted OMV | €45,000 |
| BIK Rate (Category A, EV) | 9% |
| BIK value | €4,050 |
| Income tax + USC + PRSI at ~52% combined | ~€2,106 per year |
| Monthly BIK cost to employee | ~€176 |
Compare this with a diesel Category E car at the same OMV with no reduction: €13,750 BIK, costing the employee roughly €715/month in additional tax.
Business Mileage: It Still Matters
Even under the new system, the amount of business mileage you drive reduces your BIK. Revenue uses an annual mileage discount:
| Annual Business Mileage | OMV Reduction |
|---|---|
| Less than 24,000 km | No reduction |
| 24,000–32,000 km | 20% reduction |
| 32,000–40,000 km | 40% reduction |
| 40,000–48,000 km | 60% reduction |
| Over 48,000 km | 80% reduction |
For high mileage drivers, this can dramatically reduce the BIK charge. An employee doing 48,000 km of genuine business travel per year sees their OMV reduced by 80% — meaning very little BIK to pay regardless of vehicle type.
Records of business mileage must be kept (date, journey, purpose, odometer readings) to support the reduction if Revenue audits.
Home Charging: Is There a BIK on Charging Equipment?
Where an employer installs an EV home charging unit for an employee, and the electricity costs are borne by the employer, Revenue treats this as a taxable BIK unless it falls within an exemption. However, since 2023, Revenue has a specific exemption: the provision and installation of a home charger by an employer for an employee's EV company car is not a BIK provided the charger is for the business vehicle. The ongoing electricity costs are more complex — if the employer pays, there may be a BIK on the electricity value.
Is a Company EV Still Worth It in 2025?
Despite the phase-down of the reduction, EVs remain significantly more BIK-efficient than petrol or diesel cars at the same price point. The 9% BIK rate versus 20–37.5% for ICE vehicles means the gap is still very large.
Quick Comparison: Same OMV (€50,000), same salary (€75,000)
| EV | Petrol Category D | |
|---|---|---|
| OMV after reduction | €40,000 | €50,000 |
| BIK Rate | 9% | 20% |
| Annual BIK value | €3,600 | €10,000 |
| Extra tax to employee | ~€1,872/yr | ~€5,200/yr |
| Difference | €3,328/yr less for EV |
Use the Irish Tax Estimator income tax calculator to model your overall income tax position including BIK additions.
Frequently Asked Questions
What if I give back my company car — does BIK still apply? BIK is calculated based on the period of availability. If you surrendered the car partway through the year, Revenue pro-rates the BIK to the months the car was available to you.
Does BIK apply even if I don't use the car for personal journeys? Revenue's default position is that a company car available to an employee involves some element of personal use. If you can demonstrate that the car is solely for business use and is kept at the business premises overnight with no personal use, BIK may not apply — but this is rarely accepted in practice without very strong evidence.
I drive my own car for work and get mileage reimbursements. Does BIK apply? No. Mileage reimbursements on your own car are not a BIK. Revenue has approved mileage rates (currently €0.43 per km for the first 1,500 km per year, then lower rates for higher mileage) that can be paid tax-free. Amounts above these rates are taxable.
My company car is a pool car used by multiple people. Is BIK still charged? Pool cars used by multiple employees are generally exempt from BIK, provided no single employee has the car available to them for more than 60% of working days, and the car is kept at the business premises when not in use. The exemption is strict and Revenue scrutinises it carefully.
Will EV BIK relief disappear entirely from 2026? Based on current legislation, the OMV reduction is nil from 2026 onwards. However, EVs will still benefit from the 9% BIK rate (versus up to 37.5% for high-emission vehicles) regardless. The 9% rate itself applies to all Category A zero-emission vehicles regardless of whether there's an OMV reduction.
This article is for informational and estimation purposes only. It does not constitute professional tax advice. Tax rules can change. Always check Revenue.ie for the latest figures or consult a qualified tax advisor for your specific situation.
Written by a Chartered Accountant
All guides on Irish Tax Estimator are written and reviewed by a qualified Irish Chartered Accountant to ensure accuracy. This article is for general information only and does not constitute professional tax advice.