Company cars as fringe benefits: three applicable regimes according to the Revenue Agency

With Circular No. 10/E of July 3, 2025, the Revenue Agency provided clarification on the tax treatment of mixed-use vehicles (cars, motorcycles, mopeds) assigned to employees, outlining three different calculation regimes.

2025 Budget Law regime

Paragraph 48 of the 2025 Budget Law replaced letter a) of paragraph 4 of Article 51 of the TUIR, introducing a new fringe benefit taxation regime for mixed-use vehicles to support ecological transition. The new regime, applicable from January 1, 2025, sets the fringe benefit at 50% of the amount corresponding to a standard annual mileage of 15,000 km, based on ACI tables. This percentage drops to 10% for fully electric vehicles and 20% for plug-in hybrid electric vehicles. To apply this regime, the following conditions must all be met starting from January 1, 2025: (i) the vehicle must be newly registered; (ii) the mixed-use contract must be signed; (iii) the vehicle must be assigned (delivered) to the employee.

Transitional regime under Article 6, paragraph 2-bis, of Decree-Law No. 19/2025

To ensure a smooth transition and protect business and employee expectations, a transitional provision was introduced. This provision states that the previous regime (in effect as of December 31, 2024) continues to apply to: (i) vehicles assigned for mixed use from July 1, 2020, to December 31, 2024; (ii) vehicles ordered by the employer by December 31, 2024, and assigned for mixed use between January 1, 2025, and June 30, 2025.

Even for this second case, the registration and contract must have been completed between July 1, 2020, and June 30, 2025. Furthermore, if a vehicle qualifies under the transitional regime but the 2025 regime is more favourable (e.g., for electric vehicles), the more advantageous regime applies.

“Normal value” regime excluding business use

For all other cases not covered by the new or transitional regimes, the general rule in Article 51, paragraph 3, of the TUIR applies. Under this rule, the fringe benefit value is based on the “normal value” as per Article 9 of the TUIR but only for the private-use portion. Business use must be excluded if it can be objectively and documentably identified.

An example is a vehicle ordered by December 31, 2024, with a contract signed in 2024 but delivered to the worker in July 2025. Since the delivery is after June 30, 2025, the transitional regime does not apply, and the normal value rule must be used.

The circular also addresses two specific cases. First, contract extensions: if the duration of an existing contract is extended, it does not constitute a new contract, so the original tax rules continue to apply throughout the extension period.

Second, vehicle reassignment to another employee: this is treated as a new contract, so the tax regime in effect at the time of reassignment applies. For reassignments:

1. if reassigned in 2025 and delivered by June 30, 2025 (original order by 12/31/2024), the transitional regime applies;
2. if delivered after June 30, 2025, the normal value rule applies;
3. if reassigned with a new contract and delivery in 2025 for a vehicle registered in 2025, the 2025 Budget Law regime applies.

In conclusion, Circular No. 10/E of July 3, 2025, offers an important interpretive clarification on fringe benefits related to mixed-use company vehicles, clearly outlining the three applicable regimes based on contractual and timing conditions.