START HERE22 October 2026 · 12 min read
By Irish Tax Mate
Rates last updated: 22 October 2026 · How we verify
Benefit in Kind in Ireland: What Your Company Car, Health Insurance and Other Perks Really Cost You
A company car, health insurance paid by your employer, a cheap loan from work: in Ireland these are benefit in kind, and Revenue taxes them as if they were salary. The value is added to your pay every month, taxed at your marginal rate, and never actually paid to you. This guide shows what each benefit costs in 2026, what changes on 1 January 2027, which perks stay tax-free, and the one benefit most expats are taxed on without claiming the relief that comes with it.
IN SHORT
- BIK is "notional pay": a perk's cash value is added to your gross pay and taxed through payroll; above €44,000, about 47% of it leaves your net pay.
- A €35,000 petrol company car costs a higher-rate taxpayer about €296 a month in 2026 and about €355 in 2027; a €45,000 electric one about €89 and €178.
- Employer-paid health insurance is taxed too, but you can claim 20% of the premium back yourself.
What is benefit in kind and how is it taxed in Ireland?
IN SHORT
- Anything of value your employer gives you that isn't money: a car, a van, health insurance, a below-market loan, accommodation, vouchers over the small-benefit limit.
- Revenue puts a cash value on it, your employer adds it to your pay as notional pay, and Income Tax, USC and PRSI are deducted on the total.
- Anyone earning over €1,905 a year is taxed on benefits; the limit doesn't apply to company directors (Revenue).
- It's taxed at your marginal rate, not a flat BIK rate. A benefit worth €1,000 a year costs a higher-rate taxpayer €400 of Income Tax plus USC at the rate the extra income falls into (3% between €28,700 and €70,044) plus PRSI at 4.35% on pay dates from 1 October 2026: €473.50 in all. On the 20% band the same benefit costs €273.50.
- You never receive the money, but you pay the tax on it. The notional pay line on your payslip increases your taxable gross and then disappears again before net pay. If your contract says €60,000 and the car is worth €7,500 in BIK, Revenue sees €67,500.
- The value is the higher of what it cost your employer or what you could sell it for, less anything you pay your employer for it. Cars, vans, accommodation and loans have their own valuation rules, set out below.
- It raises your effective rate without raising your take-home. Put your salary plus the BIK value into the Salary After Tax calculator and compare the result with salary alone: the difference is what the benefit costs you each year.
How is a company car taxed in 2026?
IN SHORT
- A percentage of the car's Original Market Value (OMV, the Irish list price new incl. VAT and VRT, even if second-hand), after a €10,000 reduction in 2026.
- The rate depends on CO2 band and business km: up to 26,000 km a year, from 15% for zero emissions to 37.5% above 179 g/km.
- See Revenue, calculating the value of the benefit for the full rules.
| CO2 band (g/km) and business km | Rate applied to OMV less €10,000 |
|---|---|
| A1 (zero emissions): up to 26,000 km / 26,001–39,000 / 39,001–48,000 / over 48,000 | 15% / 12% / 9% / 6% |
| A (1–59): same bands | 22.5% / 18% / 13.5% / 9% |
| B (60–99): same bands | 26.25% / 21% / 15.75% / 10.5% |
| C (100–139): same bands | 30% / 24% / 18% / 12% |
| D (140–179): same bands | 33.75% / 27% / 20.25% / 13.5% |
| E (over 179, no €10,000 reduction): same bands | 37.5% / 30% / 22.5% / 15% |
- The €10,000 reduction halves in 2027 and halves again in 2028. It is €10,000 for 2026, €5,000 for 2027 and €2,500 for 2028, for bands A1 to D and for vans. Band E cars never get it. Budget 2027 added no new BIK measures, so the step-down on 1 January 2027 is already law.
- The 48,001 km top band is permanent from 2026. Only drivers with written business mileage above 48,000 km a year get the lowest rates. Without mileage records, Revenue lets your employer assume 8,000 private km and treat the rest of the mileage as business.
- Only money you pay your employer reduces the BIK. A monthly contribution paid directly to the company for running costs comes off the taxable value; fuel you buy yourself at the pump does not. A lump sum towards the purchase price reduces the BIK in the first year only.
- Your employer must review the value at least quarterly, so a car returned mid-year, or a change of car, should change the notional pay on your payslip within a quarter. If it doesn't, you are overpaying.
What does a €35,000 petrol car cost in 2026, 2027 and 2028?
IN SHORT
- A band C (120 g/km, 30%) car with an OMV of €35,000, 20,000 business km, no contribution, €60,000 salary: €7,500 of notional pay in 2026.
- At 47.35% (40% Income Tax, 3% USC, 4.35% PRSI) it costs about €296 a month in 2026, about €355 in 2027 and about €385 in 2028.
- The cost rises each year as the OMV reduction tapers away.
The 4.35% is the PRSI rate on pay dates from 1 October 2026; averaged over the whole of 2026 (nine months at 4.2%) the rate is 4.2375%, which is what the Salary After Tax calculator uses, so its full-year 2026 figure is about €8 lower.
| Year | Calculation and monthly cost |
|---|---|
| 2026 | (€35,000 − €10,000) × 30% = €7,500 notional pay. Tax at 47.35% = €3,551.25 a year, €295.94 a month |
| 2027 | (€35,000 − €5,000) × 30% = €9,000 notional pay. Tax at 2026 rates = €4,261.50 a year, €355.13 a month |
| 2028 | (€35,000 − €2,500) × 30% = €9,750 notional pay. Tax at 2026 rates = €4,616.63 a year, €384.72 a month |
- The 2027 and 2028 lines use 2026 tax rates. Budget 2027 moves the single cut-off to €46,500 and PRSI to 4.5% from October 2027, both announced and subject to the Finance Bill; the BIK figures themselves (the €5,000 and €2,500 reductions) are already in law.
- The same car on a €40,000 salary costs less in tax, not less in BIK. The notional pay is still €7,500, but it falls in the 40% band only above €44,000: €4,000 of it is taxed at 20% and €3,500 at 40%, so the Income Tax is €2,200 instead of €3,000.
- Compare with a car allowance. A €600-a-month cash allowance is €7,200 of real pay, taxed the same way, that you can spend on any car. A company car worth €7,500 in BIK costs the same tax, but you also get the car, insurance, service and usually fuel for business. Which wins depends on the OMV and your private mileage, not on the tax alone.
How much less does an electric company car cost?
IN SHORT
- In 2026 an electric car gets €20,000 off its OMV plus the general €10,000, so the first €30,000 is tax-free; the rest is charged at the new A1 rates of 15% down to 6%.
- A €45,000 electric car costs a higher-rate taxpayer about €89 a month in 2026 and about €178 in 2027, when the reductions fall to €10,000 plus €5,000.
- Hybrids don't count as electric (Revenue, exemptions and reductions).
| Electric car, OMV €45,000, 20,000 business km, €60,000 salary | Notional pay and monthly cost |
|---|---|
| 2026: (€45,000 − €20,000 − €10,000) × 15% | €2,250 notional pay. Tax at 47.35% = €1,065.38 a year, €88.78 a month |
| 2027: (€45,000 − €10,000 − €5,000) × 15% | €4,500 notional pay. Tax at 2026 rates = €2,130.75 a year, €177.56 a month |
| Same OMV, band C petrol, 2026: (€45,000 − €10,000) × 30% | €10,500 notional pay. Tax at 47.35% = €4,971.75 a year, €414.31 a month |
- An electric car with an OMV of €30,000 or less has no BIK at all in 2026. The two reductions bring the OMV to nil and no charge arises. In 2027 that threshold drops to €15,000, so most electric cars will carry some BIK next year.
- A home charger paid for by your employer is tax-free since 1 January 2025, if the employer keeps ownership of it, you have private use of a company electric car, and it's installed at your main residence in Ireland. The exemption does not apply to a company hybrid.
- Charging at work is tax-free when the charging point is on the business premises and available to all employees and directors, hybrids included.
- The electric relief currently runs to 31 December 2027. Revenue's page lists a €2,500 general reduction for 2028 but no electric reduction for that year, so a car taken on in 2028 may be taxed on its full OMV less €2,500 unless a future Budget extends the relief.
How is a company van taxed?
IN SHORT
- A van you can use privately is charged at 8% of its OMV after the same €10,000 reduction (€5,000 in 2027, €2,500 in 2028).
- Revenue's example: a €28,000 van gives (€28,000 − €10,000) × 8% = €1,440 of notional pay in 2026, or €940 if you pay your employer €500 a year towards it.
- At 47.35% the €1,440 costs €681.84 a year (Revenue, employer-provided vans).
- No BIK on a van you only use for work. Revenue exempts a van where you have to bring it home after work, you use it only to travel to and from work, and you spend at least 80% of your working time away from the employer's premises. If that is your job and you still see a van on your payslip, ask payroll why. Source: Revenue, van exemptions.
- A pool car has no BIK either: used by more than one employee, not kept overnight at anyone's home, private use incidental. One employee driving it home every evening breaks the pool.
- Electric vans get their own reduction: €20,000 off the OMV for a van made available in 2026 plus the general €10,000; in 2027 it is €10,000 plus the general €5,000. A €28,000 electric van has no BIK at all in 2026.
Is health insurance paid by my employer a benefit in kind?
IN SHORT
- Yes: the gross VHI, Laya or Irish Life Health premium your employer pays is added to your pay and taxed.
- The 20% medical insurance relief your insurer would normally give at source isn't applied, and nobody claims it for you: you do it in myAccount.
- Up to €200 per adult and €100 per child under 21 a year, for the current year and four years back (medical insurance relief guide).
| Employer pays a €1,600 adult policy | What it costs you |
|---|---|
| BIK on the gross premium at 47.35% (€60,000 salary) | €757.60 a year of extra deductions |
| Medical insurance relief you claim: 20% of €1,000 cap | −€200 a year, as a tax credit |
| Net cost of €1,600 of cover | €557.60 a year, €46.47 a month |
| Same policy on a €35,000 salary (20% + 3% + 4.35% = 27.35%) | €437.60 − €200 = €237.60 a year |
- Four years of unclaimed relief on a family policy is real money. Two adults and two children at the caps is €600 a year; for 2022 to 2025 that's up to €2,400 sitting with Revenue until you ask. The 2022 year closes on 31 December 2026.
- Check the payslip shows the gross premium, not the net. Employers pay the insurer net of the 20% and pay the 20% to Revenue; the BIK must be the gross figure, which is why the relief is yours to claim and not double counted.
- Not sure whether it was ever claimed? Our Tax Back service reviews the four open years and claims it with everything else you missed. The refund calculator gives you the order of magnitude first.
What is the BIK on a cheap loan from my employer?
IN SHORT
- You're taxed on the gap between the interest you paid and Revenue's rate: 4% for a loan to buy or improve your main home, 13.5% for any other loan.
- An interest-free €20,000 home loan creates €800 of notional pay a year, an interest-free €10,000 other loan €1,350, a €40,000 car loan at 5% €3,400 (the 8.5% gap).
- If the employer writes the loan off, the amount written off is taxed as pay that year (Revenue, preferential loans).
- A relocation loan from an employer is a loan like any other. Many expats get an advance for a rental deposit or a car when they arrive; unless the employer charges 13.5%, the interest gap for the months it is outstanding is BIK.
- The 4% home-loan rate only applies to a qualifying home loan on your main residence. A loan to pay a deposit on a buy-to-let or a property abroad is at 13.5%.
Which employer benefits are tax-free?
IN SHORT
- Quite a few, with conditions: up to five non-cash benefits worth €1,500 in total a year, a bike every four years, a TaxSaver travel pass.
- Also employer pension contributions, a phone or laptop with incidental private use, canteen meals open to all staff and car parking.
- Exam and professional fees the job requires and accommodation you must live in for the job are outside BIK too (Revenue).
| Benefit | Tax-free when |
|---|---|
| Small benefit exemption (vouchers, gifts) | Non-cash, up to five a year, €1,500 in total. Exceed it and the whole benefit that breaks the limit is taxed, not just the excess |
| Cycle to Work | Employer buys the bike: up to €1,250 for a bike, €1,500 for an e-bike, €3,000 for a cargo or e-cargo bike, once every four years, mainly for commuting |
| TaxSaver travel pass | Bus, rail or Luas pass bought by the employer, usually through salary sacrifice; the pass cost comes off your taxable pay |
| Pension contributions | Employer contributions to a Revenue-approved occupational scheme. Employer PRSA contributions are tax-free up to 100% of your pay from 1 January 2025; above that they are BIK |
| Phone, laptop, IT equipment | Provided for business use with incidental private use |
| Canteen, car parking, one annual check-up | Canteen meals and the check-up must be available to all employees; car parking has no condition |
| Exam fees, professional subscriptions, work permits and visas | Exam fees and subscriptions where the qualification or membership is required for the job; permits and visas with no condition |
| Long-service award | A physical gift, not cash or vouchers, after at least 20 years, costing no more than €50 per year of service |
| Accommodation | Only where the job requires you to live there; otherwise the value is taxable |
- The small benefit exemption is the one to ask for at bonus time. A €1,500 voucher is worth €1,500; the same €1,500 as a cash bonus is worth about €790 to a higher-rate taxpayer. Our bonus tax guide covers what else works.
- Relocation costs can be reimbursed tax-free, but only actual costs. Removal of furniture, travel for the move, storage, solicitor's and auctioneer's fees, up to three months of receipted temporary rent or up to ten nights of subsistence are tax-free when the move is necessary for the job. A round-sum "disturbance" payment is salary. Source: Revenue, removal and relocation expenses.
- Since 1 January 2024 employers report the small benefit, the €3.20 remote working allowance and travel and subsistence to Revenue on each pay date, so these amounts appear in your Revenue record even though they are not taxed.
How does BIK show on my payslip, and what goes wrong?
IN SHORT
- As notional pay, BIK or benefit in kind in the gross section: it's taxed for Income Tax, USC and PRSI, then deducted again before net pay.
- It's in the gross pay Revenue holds for you, so your Statement of Liability and year-to-date figures include it.
- Common errors: the value isn't updated when the benefit changes, your contribution isn't deducted, the medical insurance relief is never claimed.
- The car changed, the BIK didn't. A new car with a different OMV or CO2 band, a car returned in March, or a switch from a band C diesel to an A1 electric should move the notional pay within a quarter. Compare the figure on your payslip with the table above; if it hasn't moved, you are paying tax on a car you no longer have.
- Your contribution isn't being deducted. Money you pay your employer for the car reduces the BIK; check that the notional pay is net of it. Contributions paid to anyone else, such as the leasing company, don't count.
- A business-only van or a pool car is on your payslip. If the exemption conditions are met, there should be no BIK line at all. Ask payroll in writing.
- BIK is not refundable. Unlike emergency tax, correctly charged BIK isn't an overpayment: the only refunds come from an overstated value, a missed contribution, or the medical insurance relief. If your payslip has a BIK line you can't reconcile, our Payslip Review reads it with you and fixes it with Revenue; if you only want to see the yearly cost, use the Salary After Tax calculator with and without the benefit.
Related reading
Questions we get asked
How much tax do I pay on a company car in Ireland in 2026?
Between 15% and 37.5% of the car's Original Market Value less €10,000 is added to your pay as notional pay, depending on its CO2 band and your business mileage, and you pay Income Tax, USC and PRSI on that amount. A €35,000 band C car driven under 26,000 business km creates €7,500 of notional pay, which costs a higher-rate taxpayer about €3,551 a year in 2026. The €10,000 reduction falls to €5,000 in 2027 and €2,500 in 2028.
Do electric company cars pay BIK in 2026?
Only above €30,000 of OMV. An electric car gets a €20,000 reduction plus the general €10,000, and the balance is taxed at the new A1 rate of 15% (less with higher business mileage). A €45,000 electric car creates €2,250 of notional pay in 2026, about €89 a month for a higher-rate taxpayer. In 2027 the reductions drop to €10,000 plus €5,000, so the same car creates €4,500. Hybrids are not treated as electric.
Is employer-paid health insurance taxed as BIK in Ireland?
Yes. The gross premium is added to your pay and taxed, and the 20% medical insurance relief is not applied at source. You claim the relief yourself in myAccount, up to €200 per adult and €100 per child under 21 a year, for the current year and the previous four. Most expats whose employer pays their policy have never claimed it.
Can I claim tax back on benefit in kind?
Not on correctly charged BIK: it isn't an overpayment. Refunds arise when the value was overstated (a car you returned, a wrong OMV or CO2 band), a contribution you paid your employer wasn't deducted, a van or pool car that met the exemption was charged anyway, or the medical insurance relief on an employer-paid policy was never claimed. Those are corrected through payroll or on your Income Tax Return for the year.
What is the small benefit exemption in 2026?
Your employer can give you up to five non-cash benefits a year, such as vouchers, worth €1,500 in total, free of Income Tax, USC and PRSI. The benefits can't be cash or exchangeable for cash, and if one of them takes the total over €1,500 that whole benefit is taxed, not just the excess. Since 2024 the employer reports each one to Revenue on the pay date.