Do you use your company car for client meetings and at weekends? Your business is then funding some of your private travel. That benefit must be accounted for, even if you receive no additional cash.
The most common calculation is 0.9% of the purchase price excluding VAT per month, with a minimum of CHF 150. You must then treat the benefit correctly in payroll or, for a sole proprietor, in the business accounts, and separately assess VAT.
At a glance
- The ordinary flat-rate private-use benefit is 0.9% of the VAT-exclusive purchase price per month, with a minimum of CHF 150.
- A vehicle costing CHF 40,000 excluding VAT produces a benefit of CHF 360 per month, or CHF 4,320 per year.
- For a leased vehicle, use the cash purchase price excluding VAT shown in the contract, not the monthly lease payment.
- For an employee, private use is a reportable salary benefit. For a sole proprietor, it adjusts private costs borne by the business.
- Luxury vehicles and VAT require separate analysis. Switzerland does not have one uniform luxury-car threshold for every canton.
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Why must you account for private use of a company car?
A business can bear genuine business expenses. A director’s or employee’s private costs cannot disappear into overheads simply because the vehicle was purchased in the company’s name.
The private-use adjustment puts a value on personal use, including leisure trips and holidays. For an employee, the current flat rate also covers commuting between home and work. Do not automatically apply that payroll rule to a sole proprietor: Geneva’s practice treats their home-to-work journeys as business travel. The user’s status therefore matters before you even choose the calculation method. Private use must be considered alongside purchase or leasing costs, insurance, maintenance and depreciation.
Owning a separate private car does not, by itself, eliminate the benefit on the company vehicle. Assess its actual use and the conditions under which it is available. Conversely, a vehicle whose private use is substantially restricted by permanent business equipment may qualify for different treatment.
How to calculate the 0.9% flat rate
The flat rate applies to the usual situation where the employer pays the vehicle’s costs, subject in particular to fuel for long private journeys. Use the purchase price excluding VAT, including special equipment.
| Purchase price excluding VAT | Monthly calculation | Monthly benefit assessed | For twelve months |
|---|---|---|---|
| CHF 12,000 | CHF 108 | CHF 150 minimum | CHF 1,800 |
| CHF 40,000 | CHF 360 | CHF 360 | CHF 4,320 |
| CHF 60,000 | CHF 540 | CHF 540 | CHF 6,480 |
The annual flat rate is 10.8% where the vehicle is available for twelve months. Do not automatically charge a full year if availability begins or ends during the year.
Used and leased vehicles
For a used vehicle, the relevant acquisition price is the starting point, not automatically the original new-car list price. Retain the purchase invoice.
For leasing, use the cash purchase price excluding VAT stated in the contract, or the relevant contractual value. A CHF 600 monthly lease payment does not therefore produce a CHF 5.40 private-use benefit. The business may not legally own the car, but its private use still has a value.
What about commuting?
Since 2022, an employee’s home-to-work journeys have been included in the 0.9% flat rate. In the ordinary case, the same journeys are not valued a second time, and the employer ticks box F on the salary certificate. Any commuting deduction must be consistent with this employer-provided transport. For a sole proprietor, do not automatically import the employee rule: check the applicable method and classification of journeys, including the published cantonal practice (in French).
Can you use an actual-use calculation?
Yes, provided that journeys are documented in a compliant logbook. The records must distinguish business from private travel and be maintained consistently and verifiably. Reconstructing a rough percentage in December is much less convincing.
For employees, the federal 2026 salary certificate instructions provide for multiplying private kilometres, including commuting, by the applicable kilometre rate. They include an example using CHF 0.75 per kilometre. Check the rate applicable to the particular circumstances.
For a sole proprietor, allocating actual costs can identify the private share. For example, if 3,000 private kilometres represent 15% of the 20,000 kilometres driven and the relevant annual costs are CHF 15,000, allocating those costs would produce CHF 2,250. This assumes that the vehicle’s classification, costs and method are accepted. It does not replace the employee mileage-based method.
Choosing actual use only in a favourable year and then freely returning to the flat rate is not necessarily permitted. Some cantonal practices require continuity, particularly until the vehicle is replaced.
What VAT applies to private use?
Treatment depends, among other things, on the user’s status, the VAT reporting method and entitlement to input tax recovery. Providing a car to an employee and a sole proprietor’s own private use do not automatically receive the same treatment.
First establish whether this is a taxable supply to an employee or an input tax adjustment for a sole proprietor’s private use. The payroll flat-rate amount alone does not resolve that classification.
Once a taxable VAT-inclusive amount has been established, extract VAT using: VAT-inclusive amount × 8.1 ÷ 108.1. An illustrative CHF 4,320 inclusive amount gives CHF 323.70 of VAT and CHF 3,996.30 excluding VAT. CHF 4,320 is used here to connect the arithmetic with the previous annual example; that numerical connection does not establish the correct VAT treatment in every case. Multiplying a VAT-inclusive amount directly by 8.1% would be wrong.
This arithmetic example does not mean that every private-use adjustment uses the same entry. Net tax rate reporting and cases without input tax recovery require their own analysis. Our Swiss VAT article and article on VAT reporting mistakes explain the wider context.
Luxury vehicles: understanding the CHF 100,000 threshold
The CHF 100,000 VAT-exclusive threshold is not exclusively a Geneva concept. This benchmark appears, in particular, in earlier Federal Tax Administration practice applied in a Valais case considered by the Federal Supreme Court in 2013, paragraph 9.1 (in French). That reference explains its historical background; it is not a current VAT scale to apply unchanged.
Luxury-car treatment also arises outside Geneva. The published Thurgau practice (in German) provides, in particular, for examining whether vehicles used by shareholders of incorporated companies are luxurious when their value exceeds CHF 100,000. A Vaud entrepreneur should not dismiss the issue merely because Geneva publishes a worked calculation.
That does not make the thresholds and methods identical in every canton. For comparison, the Zurich directive applicable from 2026 (in German) uses a price above CHF 120,000 excluding VAT for vehicles provided to controlling shareholders actively working in their company, and also applies that threshold to sole proprietors. Business justification and the user’s status remain important.
Worked example: Geneva’s published method
Geneva publishes a detailed method (in French) which, unless specifically justified otherwise, treats CHF 100,000 excluding VAT as the ordinary portion. For a car purchased for CHF 140,000 excluding VAT, the annual private-use adjustment during the first five years is:
| Component of the annual adjustment | Calculation | Amount |
|---|---|---|
| Private use of the ordinary portion | 100,000 × 0.9% × 12 | CHF 10,800 |
| Luxury purchase portion, spread over five years | 40,000 ÷ 5 | CHF 8,000 |
| Maintenance of the luxury portion | 40,000 × 0.4% × 12 | CHF 1,920 |
| Annual total during the first five years | 10,800 + 8,000 + 1,920 | CHF 20,720 |
From year six, the official example gives CHF 12,720 per year: CHF 10,800 + CHF 1,920. Under this method, a leased vehicle’s luxury purchase portion is spread over the contract term.
Keep two points in mind: this issue is not confined to Geneva, but the example is not a uniform Swiss-wide scale. Before buying or leasing, check the business need, the relevant canton’s rules and the treatment of both company and user. Assess VAT separately.
Keep the records that support your calculation
Retain the purchase invoice or lease contract, availability dates, agreement with the user, any employee contributions and a logbook if using actual use. Then reconcile the figures in the accounts, VAT returns and salary certificate.
A company car can be practical, but it does not eliminate the private cost of travel. Our accounting team can help you establish consistent treatment before the purchase or at year-end.
Set the treatment before the car enters the business
Confirm the user’s status, the VAT-exclusive vehicle value and the relevant canton’s rules. Record the method and supporting documents, then align payroll, accounts and VAT reporting. A low lease payment or a second private car is not a substitute for this calculation.
Frequently asked questions
Are electric cars exempt from the flat-rate benefit?
No. The flat rate generally applies to electric and hybrid cars too. Check the treatment of particular expenses separately.
Does the CHF 150 minimum apply to every actual-use calculation?
It is the minimum for the ordinary flat-rate method. Do not automatically apply it to every actual-cost or mileage-based method.
Can we simply avoid declaring any private use?
Only if the circumstances genuinely justify the absence of a private benefit under the applicable rules. An oral assertion or ownership of a second car is not enough.
Is the CHF 100,000 luxury-car threshold specific to Geneva?
No. The benchmark has a precedent in federal practice and also appears in other cantonal practices. However, the rules are not uniform: from 2026, Zurich uses a price above CHF 120,000 excluding VAT for the relevant categories. Do not automatically apply Geneva’s calculation throughout Switzerland.
Sources and updates
- FTA/Swiss Tax Conference: salary certificate instructions 2026, paragraphs 21–25 (in French).
- Geneva: private use of business vehicles (in French).
- Bern: private use of a company car (in French).
- Federal Supreme Court: judgment 2C_645/2012 of 13 February 2013, paragraph 9.1, historical federal practice (in French).
- Thurgau: tax practice StP 19 no. 5, section 2.3.2 (in German).
- Zurich: ZStB 17.1 directive applicable from 2026 (in German).
English editorial review: 22 September 2026. Based on the French article reviewed on 20 September 2026, with the linked cantonal references checked for this edition.
Romain Prieur is a Swiss-qualified chartered accountant and the founder of Entreprendre.ch. With more than ten years of experience in audit and business advisory in Switzerland, he helps entrepreneurs with company formation, accounting and business taxation.
How is private use recorded in payroll or the accounts?
Employees and employed directors of an LLC or limited company
The private-use benefit is generally added to the relevant salary base as a benefit in kind and reported in section 2.2 of the salary certificate. Its treatment must be consistent with social security contributions and any amounts paid by the employee.
It is not paid again in cash. Payroll may therefore add the benefit when calculating the relevant bases, then deduct it from cash net pay because it has already been provided through use of the car. The exact entries depend on the software and chart of accounts.
An employee contribution towards costs may affect the calculation. However, paying only for holiday fuel does not automatically remove the flat-rate benefit. To consider an owner-director’s overall remuneration, read our article on salary versus dividends.
Sole proprietors
You do not pay yourself an employee salary. The private-use adjustment excludes personal costs from your business expenses. You must also assess whether the vehicle belongs to your business assets for tax purposes.
In both cases, a year-end entry should be traceable to a purchase invoice, contract, period of use and calculation method. That consistency makes the calculation defensible.