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Company car: electric, hybrid or combustion? 5 rules for choosing
Step Inside Accounting · Practical guide
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1. The car pays a tax of its own: autonomous taxation
Expenses on passenger cars pay an extra corporate tax (IRC), called autonomous taxation (tributação autónoma). It is a percentage of all the car’s costs: depreciation or lease payments, fuel or electricity, insurance, maintenance, tolls and parking.
It is due even if the company makes no profit. The rate depends on the type of car and its purchase cost.
2. The 2026 rates
- Combustion (including non-plug-in hybrids): 8% up to €37,500, 25% between €37,500 and €45,000, 32% from €45,000.
- Plug-in hybrids that meet the electric range and emissions requirements, and natural gas cars: 2.5%, 7.5% and 15%, in the same brackets.
- 100% electric: 0% up to €62,500 and 10% above that.
When the company has a tax loss, these rates usually go up by 10 points. In 2026, that increase is suspended for companies that meet certain conditions.
3. Depreciation has a cap
The car is depreciated at 25% a year, that is, over 4 years. But for IRC, depreciation only counts up to a maximum cost:
- Combustion: €25,000.
- Plug-in hybrid: €50,000.
- Electric: €62,500.
On a €40,000 combustion car, the depreciation of the €15,000 above the cap does not reduce IRC, but it still pays autonomous taxation.
4. VAT changes everything
For VAT, the rule is simple: on a combustion car, the company recovers no VAT on the purchase or the lease. On an electric car up to €62,500, or a plug-in hybrid up to €50,000, it recovers all the VAT. Electricity is deductible; diesel gives 50% and petrol nothing.
The details, including leasing, renting and maintenance, are in our article on VAT on company cars.
5. Run the numbers before you buy
For the same price, the choice of engine can be worth thousands of euros a year. Before buying, compare the VAT you recover, the yearly autonomous taxation and the part of the depreciation that does not count.
Example
A car costing €40,000 + VAT (€9,200), with €12,000 of costs a year (€10,000 of depreciation and €2,000 of insurance, energy and maintenance):
- Combustion: recovers €0 of VAT and pays €3,000 of autonomous taxation a year (25%). Only €6,250 of the yearly depreciation counts for IRC.
- Plug-in hybrid: recovers €9,200 of VAT and pays €900 a year (7.5%).
- Electric: recovers €9,200 of VAT and pays no autonomous taxation.
Team tip
Before you sign, send us the car or leasing quote. We will run the comparison for your case; sometimes the answer is to use your own car and claim mileage. A commercial van also pays no autonomous taxation.
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This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
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