Car Expenses Deduction

Purchase of Car

Like other assets, a car can be expensed directly if it is of lesser value (28,650 SEK excl. VAT in 2024) or has a lifespan of at most 3 years. If the price is higher than 28,650 SEK, the car should be considered an asset. The asset is divided over the number of years it is expected to be used/survive (depreciation). Depreciation is done every year, and the cost is deductible.

Other costs that are not included in the invoice, but which in total exceed 5,000 SEK, should be included in the acquisition value of the car. For example, freight, registration fees, and customs.

VAT on Car Purchase

Normally, VAT cannot be reclaimed on the purchase of passenger cars. However, there are exceptions for a group of businesses that can get the VAT back on the purchase of a passenger car. We can call this group the exception group, which consists of:

  • Taxi

  • Rental services

  • Car dealerships

  • Funeral services

  • Driving schools


Leasing (not installment purchase)

The difference between leasing and buying on installment is that with leasing, you are not obliged to purchase the car at the end of the loan period or have the option to take over the car at the end of the loan period for a small sum.

For leasing, half the VAT (50%) can be deducted provided that the car is driven more than 100 kilometers per year in the VAT-liable operation. In that case, the other half of the VAT along with the rest of the payment is considered a deductible cost.

The exception group (for example, taxi, driving school) can deduct the full VAT (100%).

The company car can be used for private purposes to a limited extent (max 10 times or 100km per year). If the car is used more than the limit, it is considered a benefit and should be taxed as a benefit. Read more about benefits.


Operating Costs

Operating costs include all possible expenses related to the car such as fuel, repairs, maintenance, etc.

If the car is necessary for the operation, and is purchased or leased by the company, deductions for operating costs can be made.

If the car is used privately and the company pays for the fuel, it is considered a benefit and should also be taxed as a benefit. Commuting to and from work is considered a private cost.