Company car or private car – which pays better?

A company car gives a taxable benefit calculated from the list price, not from what the car actually costs you. A private car is financed with taxed kroner but gives a tax-free mileage allowance of NOK 3.50 per business kilometre in 2026. For a class 2 van there is a third route: an electronic log book at NOK 3.40 per private kilometre, which often beats the standard formula by a wide margin.

Company cars in 2026

Where an employer's car is available for private use, the benefit is normally 30% of the basis up to NOK 370,300, plus 20% of the rest. A car with a list price of NOK 600,000 therefore gives an annual taxable benefit of NOK 157,030. The benefit is added to your employment income. The actual tax depends on your marginal rate, and the company pays employer's contributions on the benefit. Note what is not in the calculation: what the car costs the company. The formula cares about the list price, not whether you bought the car second-hand at half price.

Age and heavy business use can reduce the basis

Where the car is 3 years old or more at 1 January of the income year, 75% of the original list price is used. Documented business driving exceeding 40,000 kilometres also gives a 75% basis. Where both conditions are met, 56.25% applies. Same car, same use – but the basis is almost halved, and it assumes the driving is actually documented. Electric cars no longer have a company car discount of their own.

Occasional private use

Private use is tax-free where it does not exceed 10 calendar days a year and does not exceed 1,000 private kilometres. Both conditions have to be met. Eleven days totalling 200 kilometres is therefore not occasional use.

A class 2 van has two models

Where there is a business need for a class 2 van or a small lorry, you can choose between a reduced list price – a 50% reduction, capped at NOK 150,000 – or actual private kilometres at NOK 3.40 per kilometre in 2026, with an electronic log book. With a list price of NOK 450,000 and 8,000 private kilometres, the benefit under the kilometre rule is NOK 27,200. That can be far lower than the standard benefit. The price is that the log book has to be electronic and actually kept.

Green plates do not automatically mean full VAT recovery

For an ordinary passenger car and a class 1 van, input VAT is as a general rule blocked, with some special exceptions. A class 2 van falls outside that particular block, but the ordinary VAT rules still apply. Where the van is used both privately and in a VAT-liable business, the deduction has to be apportioned by expected use. The rule «green plates = always 100% VAT recovery» is wrong, and it is one of the most common errors we see in small business records. The main rules on VAT deductions apply to cars too.

A private car and the mileage allowance

Where you own the car privately, the company can pay a tax-free mileage allowance for documented business driving. The rate in 2026 is NOK 3.50 per kilometre. Drive 10,000 business kilometres and the company can pay NOK 35,000 tax-free. The state travel agreement rate is higher. Where more than the tax-free rate is paid, the difference is taxable salary – paying more is not wrong, but the excess has to be reported as pay. The rates and documentation requirements are in Expense claims, subsistence and mileage. Travel between home and a fixed place of work is normally a private commute, not business driving.

Which pays better?

A company car can be attractive where the car depreciates heavily, has high running costs and a lot of private use – that is, where the company carries costs you would otherwise have privately. A private car can be attractive where you already own an inexpensive car, have a lot of documented business driving and the company car would have a high list price. For a van you should normally compare three alternatives: company-owned with the standard formula, company-owned with an electronic log book, and privately owned with a mileage allowance. Remember that a company car benefit is a benefit in kind and also attracts employer's contributions – see Benefits in kind We can put together a total cost comparison based on the car price, the financing, the driving pattern, the employer's contribution zone and the VAT position. Where the company owns the car, it also has to be classified in the right depreciation group – see Depreciation For a transport business the choice of vehicle connects to the licence, the VAT recovery and the depreciation group – see Accounting for transport and courier businesses

This is general guidance, not advice on your specific case. Deadlines, rates and amounts change – always check the current rules, or get in touch with us.

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