Taxes Consolidation Act 1997 section 121

Benefit of use of car

Section 121 charges income tax on the benefit derived by directors and employees from the private use of company cars, calculated as a percentage of the car's original market value based on CO2 emissions and annual business kilometres.

• Where a car is made available to an employee or director for private use by reason of their employment, income tax is charged on the cash equivalent of that benefit, calculated as the original market value (OMV) multiplied by a percentage determined by the car's CO2 emission category (A1 to E) and the annual business kilometres driven.
• The OMV is temporarily reduced for cars in categories A1 to D by €10,000 (2023–2026), €5,000 (2027), and €2,500 (2028), with electric vehicles benefiting from an additional reduction of €35,000 (2023–2025), €20,000 (2026), and €10,000 (2027).
• As an alternative to mileage-based tapering relief, an employee may elect for a 20% reduction in the cash equivalent where they drive at least 8,000 business kilometres per year, spend 70% or more of their working time away from the employer's premises, and work at least 20 hours per week on average.
• No BIK arises where a car is included in a car pool — that is, it is shared among employees, private use is merely incidental, and the car is not normally kept overnight near any employee's home.