Do you provide company vehicles for the use of your crossborder employees? These new rules could affect you!
The entry into force of the new European Union Implementing Regulation (EU) 2015/234 as of 1 May 2015 means that company vehicles registered in Switzerland and placed at the disposal of employees resident in the EU will be subject to customs duties if they are used for private purposes.
In cases of non-compliance with European customs regulations, the user, i.e. the employee, becomes liable for the corresponding import duties and taxes as well as any fines for not clearing the vehicle through customs.
Company vehicles registered in Switzerland and used by employees residing in Switzerland are not affected by this change. However, for cross-border commuters, companies have to distinguish between those who use such vehicles purely for professional purposes and those who use them for professional and personal ends.
(i) In the first case, a cross-border commuter using a vehicle only for the journey to and from home to the place of work and to carry out professional activities specified in the employment contract may continue as before under the current rules (temporary admission procedure, which suspends customs duties and import tax). It is essential for companies to amend employment contracts and other internal regulations, where necessary, to reflect the intended use of vehicles. Moreover, a copy of the employment contract should be kept in the vehicle at all times.
(ii) The second case is more challenging because the employers must decide whether to continue to allow personal use of the vehicle.
If the employer were to prohibit the personal use of the vehicle, the employment contract would have to be modified, This has consequences, especially in terms of compensation, social security contributions and the tax regime of both the employee and the company.
If personal use is allowed to continue, the vehicle must be cleared through customs (10% customs duty, 20% non-refundable VAT) and several issues have to be resolved:
- What is the value of the vehicles to be declared as there is no sale? The customs recommend Argus value but based on the French regulations in force and our experience it could be reduced.
- What measures can be taken to reduce the customs duties? Is there an alternative to the temporary admission procedure to reduce the customs duties owed?
- What formalities have to be respected?
Urgent action is needed, therefore, to ensure the use of company vehicles complies with European Union law. Our teams in France and Switzerland are at your disposal to assist you through the steps of the two approaches:
1. Clearing the vehicle through customs with the aim of maintaining stable employment contracts for cross-border commuters
Our teams can support you to:
(i) Minimise the impact of customs clearance of vehicles currently placed at the disposal of employees (clearance for personal use vs. other regime, determining the customs valuation);
(ii) Accelerate customs clearance (i.e. EORI registration, support in instructing customs agents as well as training HR teams to deal with the customs expenses now inherent when providing a company vehicle and with ‘crisis situations’ (e.g. if an employee’s vehicle is confiscated by French customs officers, negotiations over fines levied by customs, etc.).
2. Adapt current practices: prohibiting any purely personal use of the vehicle.
Our Swiss team supports you in making the required changes to employment contracts, internal regulations and other relevant documents while ensuring they comply with the other fiscal and social obligations of the company (the valuation of fringe benefits, social security contributions as well as personal and corporate tax).
Whatever the situation, we study the specific needs of your organisation and help you implement solutions tailored to your company’s fleet management.