The European Union (EU) has amended Regulation EEC No 2454/93 and has implemented Regulation (EU) 2015/234. The amendments, which came into force on 1 May 2015, introduce new and more restrictive regulations on the use of company vehicles within the EU by EU residents but which are registered in non-EU countries. Thousands of commuters use company vehicles to return home to an EU country and often such vehicles are also used for private purposes (holidays, shopping trips etc.) and employment contracts allow such use.
The changes mean that for company vehicles registered in a non-EU country (such as Switzerland), any private use by an EU resident within the EU is now strictly forbidden. The use of such a vehicle is restricted to the direct route between the place of residence in the EU and the place of work in the non-EU country. Further, no other person but the employee is allowed to drive the vehicle in the EU.
If a non-EU company vehicle is used for official business trips within the EU by EU residents, it must be clear from the employment contract of the individual driving the vehicle that such trips are part of the official business activities and are necessary for the fulfilment of the tasks expected of the respective employee. If the vehicle is transporting goods or equipment which require a border crossing into the EU, it should be clarified in advance as the items may be subject to customs duty.
It is not clear how strictly the customs authorities will enforce these new regulations. However, it is clear that if the company vehicle is used for private purposes by the EU resident, the vehicle might be confiscated by the authorities of the respective EU state and the customs duties may have to be paid. Furthermore it might lead to a VAT registration of the non-EU company.
It is expected that company vehicles travelling in the EU registered in Switzerland and owned by a Swiss employer will be checked on a regular basis. There are also similar rules in place for entries into Switzerland of a vehicle registered in the EU by an employee resident in Switzerland.
What companies need to do:
- immediately inform employees resident in the EU who use a company vehicle;
- advise EU resident employees to avoid any trips in the EU which are not employment related with the exception of the shortest route between their home address and the address of the company domiciled in Switzerland;
- review and adapt their employment contracts with EU resident employees to ensure that they meet the requirements of EU regulation 2015/234;
- advise EU resident employees to carry a photocopy of their latest employment contract in the vehicle at all times; and
- review company vehicle policies and adapt if necessary to meet the amended regulations.