Czech road tax and company car taxation: what a firm car really costs

A company car looks like a perk. To a Czech accountant it looks like a small project with four moving parts, each belonging to a different tax and each with its own paperwork. Founders usually discover this after buying the car, when the accountant asks for a logbook that does not exist. This piece explains how the parts fit, so that you ask the right questions first.

It describes principles. Rates, percentages and thresholds are amended often, and some are tied to emissions or fuel type, so check the Financial Administration before relying on any figure.

Road tax is not what you think

Road tax (silniční daň) is governed by the Road Tax Act (no. 16/1993 Coll.). It is an annual tax on vehicles, and it is not the motorway vignette, which is a separate charge for using the road network and has been electronic since 2021. Nor is it the toll that heavy goods vehicles pay by distance.

Who pays it has changed. Since 2022 passenger cars have been broadly exempt, and the tax now falls mainly on lorries and other goods vehicles heavier than 3.5 tonnes (as of 2026; check the official source). Do not assume the exemption covers every vehicle in your fleet. The payer is the registered operator or owner entered in the vehicle register. For a company, that is simply the company.

For the vehicles still in scope, the amount depends mainly on weight and the number of axles. The return is annual and filed early in the following year, with payment due at the same time (as of 2026; check the official source). Larger payers pay advances during the year. Some vehicles are exempt or taxed more lightly, and zero-emission vehicles have been treated favourably in recent years. Do not assume your car qualifies. Ask, and keep the registration certificate on file.

The employee who drives it home

When an employer lets an employee use a company car privately, the Income Tax Act treats the right to use it as a non-cash benefit. The employee's taxable income rises by a monthly amount, calculated as a percentage of the car's purchase price, subject to a monthly minimum. At present the percentage is one per cent (as of 2026; check the official source), and electric cars have had their own, reduced treatment. The amount goes through payroll like salary, which means that income tax, and in most cases social and health contributions on both sides, apply.

That surprises people who thought a company car was free to the employee. It is free in cash terms and taxed in kind. The employer must also report the benefit correctly, since an unreported one can lead to a payroll audit. Our guide to employer payroll duties shows where it fits in the monthly cycle.

A car lent for business trips only, with no private use at all, creates no benefit. That is a high bar to prove. A single weekend trip logged in the system is enough to show private use.

VAT on cars

A VAT payer can usually deduct input VAT on a vehicle in proportion to its use for business. Where the car is also used privately, the private use is treated as a taxable supply, so the business accounts for VAT on it. How strictly this is applied depends on how the car is documented, which brings us back to the logbook. The wider rules are in our explainer on Czech VAT.

Income tax: the expense side

For income tax, the cost of running a company car is deductible only to the extent that it is a genuine business expense. Fuel, insurance, repairs and depreciation or leasing are all candidates, and each must be tied to the business use. Some sole traders may use flat-rate options instead of recording actual costs. The conditions are specific, so ask whether your case qualifies.

Leasing adds a further layer. Operating leases and financial leases are treated differently, and for expensive passenger cars the law limits what can be deducted. A leasing contract signed without an accountant reading it is the most common source of unpleasant surprises at year end.

Travel allowances, a separate system

Where an employee uses their own car for a business trip, the Labour Code gives them a right to a travel allowance. It is made of a mileage rate and a fuel component, both set each year by a decree of the Ministry of Labour and Social Affairs (as of 2026; check the official source). This is quite different from the company car regime. The employee owns the car, the employer reimburses use, and no benefit in kind arises.

Foreign-registered cars

A trap for international firms is the foreign-plated company car driven by someone who lives in Czechia. EU and customs rules on where a vehicle must be registered depend on the residence of the user and how long the car is in the country. A car leased by a parent company abroad is not exempt from Czech rules simply because the lease is foreign. If this describes your arrangement, ask a customs adviser early.

Common mistakes

The recurring ones are easy to list. Buying a car through the company without deciding the private-use question. Forgetting the benefit in kind in payroll. Claiming full VAT on a car used partly for the family. Letting the registration remain in the dealer's or a former owner's name. And assuming that a rule that applied to last year's car applies to this year's electric one.

Tax rules for vehicles also move with emissions policy. A figure printed in a brochure may refer to a transitional regime that ended. The Financial Administration site carries the current forms and guidance in English, and a Czech accountant can tell you in ten minutes what an hour of web searching cannot.

Selling, scrapping and changes during the year

Road tax follows the vehicle register, so keep the register up to date when a car changes hands. The law has its own rules for how the tax is counted for part of a year, and your accountant should apply them. If you sell a company car to an employee, the sale itself has VAT and income tax consequences of its own, because the price should reflect the market value of the car. A symbolic price invites questions.

Scrapping works similarly. Remove the car from the register when it is scrapped, and keep the certificate of destruction. A written-off vehicle still listed in your name keeps appearing in the tax calendar.

Frequently asked questions

Do I pay road tax on a private car I use only for family trips?

Since 2022 passenger cars have been broadly exempt from road tax, so an ordinary car is not the target. The tax now mainly hits lorries heavier than 3.5 tonnes (as of 2026; check the official source).

Is the motorway vignette the same thing as road tax?

No. The vignette is a charge for using motorways and expressways. Road tax is a separate annual tax, now aimed mainly at heavy goods vehicles.

Is a company car free for the employee?

Not for tax. If the employee uses it privately, a taxable benefit is added to their pay each month, and the employer pays contributions on it too.

Do I need a logbook if I am a sole trader?

It is the standard way to show business use when you claim actual costs or VAT on a car. Some flat-rate options exist, so ask your accountant which applies.

Where to check

The Road Tax Act and the Income Tax Act are on the e-Collection of Laws, and the Financial Administration publishes guidance and forms. The Ministry of Finance announces changes in advance. For a specific vehicle, bring the registration certificate and the contract to a tax adviser.

This is a general explainer, not legal or tax advice.