International fleet managers can produce cost savings of tens of thousands of pounds for their companies by reducing the average carbon emissions on a typical fleet of 200 cars by just 10g/km, according to the 2013 edition of the annual European Taxation Guide.
Produced by Nexus Communication in conjunction with global accountancy firm PwC and sponsored by Opel and ARI Fleet, this year’s Guide, the seventh to date, reviews the company car tax situation in 23 European countries in print and in 29 digitally.
The guide shows that the company car is already inextricably linked to carbon emissions-based taxes in 20 member states across Europe, while other countries are keen to follow suit as governments continue to target the company car as a source of tax-raising revenue.
However, fleet managers have it within their power to achieve significant savings through adapting fleet policy.
By lowering CO2-emissions by only 10grammes from 135g/km to 125g/km, fleet managers can already produce annual savings in fuel costs of around €44,000 on a fleet of 200 cars in most European countries.
And when direct, indirect and hidden taxes are added to the fuel cost savings on the same fleet of 200 cars, the total cost savings can rise dramatically, the research suggests.
In Portugal, for example, once direct taxes are included, cost savings can be as high as €132,000 a year, while in Belgium, where there are more indirect and hidden taxes, the savings can be a staggering €163,000.
The figures throughout the guide have been produced using PwC’s extended automotive network.
When focusing on potential tax savings, reducing CO2 emissions pays off most in major developed Western European countries like Belgium, the UK, the Netherlands, France and Spain.
Comparing company car tax systems in these countries, it is clear all of them have registration taxes linked to CO2 emissions, the guide says.
It also goes on to say that, with carbon emission thresholds reducing all the time across Europe, it will soon no longer be sufficient for fleet managers simply to select diesel powered vehicles to achieve the optimal cost-saving emissions levels.
The introduction of new EU-backed carbon emissions limits of 130g/km by 2015 and 95g/km by 2020, mean that governments will lower the CO2 emission thresholds within their national car tax regimes in order to guarantee existing income levels.
The new lower limits will mean that fleet managers will have to be more imaginative in deciding which vehicles to include within their choice lists.
And with growing numbers of countries offering incentives to select cars with low carbon-emitting electric hybrid engines, the Guide says this is one option for the future.
Already some 15 Member States offer some form of incentive for hybrid vehicles and, with the rapidly increasing pump costs of diesel across Europe, allied to rising residual values of petrol cars due to a growing consumer market, petrol, hybrid and electric cars will all have to be carefully considered in choosing the right mix of company cars to meet corporate needs, it argues.
This trend, however, will further complicate the job of fleet managers, who will need to take into account the mobility profile of their drivers, the distances they drive, the areas they drive in, such as urban, non-urban or highway, and their driving behaviours.
For company car drivers in urban areas, electric vehicles may be the answer, while for mixed area drivers, hybrid vehicles may be the preferred choice, and for high kilometre drivers, diesel could be the most suitable solution, the guide says.
Luckily for both the fleet manager and the fleet driver in meeting this new challenge, vehicle manufacturers are constantly developing more carbon efficient models, whilst also paying increasing attention to comfort, functionality and design.
So more than ever it is not only wise to be tax and cost-effective, but it can also be very rewarding to pay attention to trends in car taxation.
The 23 countries covered in the printed version of the 2013 Taxation Guide are: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Russia, Spain, Sweden, Switzerland, Turkey and the United Kingdom.
The digital version expands this to 29, with those from the printed version plus Bulgaria, Estonia, Latvia, Lithuania, Slovakia and Slovenia.