- In 2025, an electric company car gets a total of €45,000 knocked off its original market value before BIK is calculated (€35,000 EV-specific relief plus the €10,000 universal reduction)
- BIK rates depend on both the car's CO2 emissions category (A–E) and your annual business mileage — EVs in Category A pay between 9% and 22.5%
- An employee driving an EV worth €55,000 can pay BIK on just €10,000 of value in 2025 — a fraction of the cost of an equivalent petrol or diesel 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 given a generous exemption that remains fully in place through 2025, before tapering down between 2026 and 2028. 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 category AND business mileage) Revenue assigns each car to an emissions category (A–E), and the BIK rate then depends on how much annual business mileage you do. Higher emissions = higher rate; higher business mileage = lower rate. Rates range from 9% (Category A, highest mileage) to 37.5% (Category E, lowest mileage).
| Annual Business Mileage | A (0–59 g/km, incl. EVs) | B (59–99) | C (99–139) | D (139–179) | E (180+) |
|---|---|---|---|---|---|
| 0 – 26,000 km | 22.5% | 26.25% | 30% | 33.75% | 37.5% |
| 26,001 – 39,000 km | 18% | 21% | 24% | 27% | 30% |
| 39,001 – 48,000 km | 13.5% | 15.75% | 18% | 20.25% | 22.5% |
| 48,001 km + | 9% | 10.5% | 12% | 13.5% | 15% |
Formula: BIK = (OMV minus any reductions) × BIK Rate
For a typical low-mileage EV driver in 2025 with an OMV of €55,000: BIK = (€55,000 − €45,000 reductions) × 22.5% = €2,250 per year
For a petrol car in Category E with the same OMV (only the €10,000 universal reduction applies, and that covers categories A–D only): BIK = €55,000 × 37.5% = €20,625 per year
The EV BIK Relief: What's Left in 2025?
When the new CO2-based system launched in 2023, EVs were given a special OMV reduction, and a separate temporary universal reduction of €10,000 was added for all cars in categories A–D. Both have been extended in subsequent Budgets. The current schedule:
| Year | EV-Specific Reduction | Universal Reduction (cats A–D) | Total for an EV |
|---|---|---|---|
| 2023 – 2025 | €35,000 | €10,000 | €45,000 |
| 2026 | €20,000 | €10,000 | €30,000 |
| 2027 | €10,000 | €5,000 | €15,000 |
| 2028 | Nil | €2,500 | €2,500 |
For 2025, Revenue reduces the OMV of an EV by a combined €45,000 before applying the BIK rate — so an EV with an OMV of €45,000 or less generates zero BIK.
Example: EV with OMV of €55,000 in 2025 (under 26,000 business km)
| Amount | |
|---|---|
| OMV | €55,000 |
| Less EV + universal reductions | –€45,000 |
| Adjusted OMV | €10,000 |
| BIK Rate (Category A, lowest mileage band) | 22.5% |
| BIK value | €2,250 |
| Income tax + USC + PRSI at ~52% combined | ~€1,170 per year |
| Monthly BIK cost to employee | ~€98 |
Compare this with a diesel Category E car at the same OMV with no reduction: €20,625 of BIK, costing the employee roughly €894/month in additional tax at the same marginal rate.
Business Mileage: It Still Matters
Even under the CO2-based system, the amount of business mileage you drive directly reduces your BIK rate, because the rate table is banded by mileage (see the matrix above). The old pre-2023 system of percentage OMV discounts for high mileage no longer exists — the mileage effect is now built into the rate itself.
For high mileage drivers, the effect is dramatic: an EV driver doing over 48,001 km of genuine business travel per year pays just 9% on the reduced OMV, compared with 22.5% for a low-mileage driver of the same car.
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?
With the full €45,000 of reductions still in place for 2025, EVs remain dramatically more BIK-efficient than petrol or diesel cars at the same price point — both through the smaller taxable value and the lower Category A rates.
Quick Comparison: Same OMV (€50,000), same salary (€75,000), under 26,000 business km
| EV (Category A) | Petrol Category D | |
|---|---|---|
| OMV after reductions | €5,000 | €40,000 |
| BIK Rate | 22.5% | 33.75% |
| Annual BIK value | €1,125 | €13,500 |
| Extra tax to employee (~52%) | ~€585/yr | ~€7,020/yr |
| Difference | ~€6,435/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 allows employers to reimburse business mileage tax-free using the civil service mileage rates, which vary by engine size (or kW for EVs) and cumulative annual business mileage — from roughly 21c up to about 84c per km. Amounts above the approved 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? No — it tapers rather than disappears. In 2026, EVs get a €20,000 EV-specific reduction plus the €10,000 universal reduction (€30,000 total), falling to €15,000 combined in 2027. Budget 2026 also introduced a new Category A1 for zero-emission vehicles from 2026, with BIK rates of just 6% to 15% depending on business mileage — lower than the 9%–22.5% that applied to EVs under Category A.
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.
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