Tax‑free workplace charging for electric vehicles becomes permanent

The Swedish Parliament has decided on amendments to the Income Tax Act under which the previously temporary tax exemption for charging electric vehicles at the workplace will become permanent as of 1 July 2026. At the same time, the rules are being extended, which may result in significant changes for employers whose employees have plug‑in hybrid company cars.

The decision is part of the green transition and aims to make matters easier for employers, reduce administrative complexity and create clearer incentives for employees to choose electric vehicles.

From temporary tax exemption to permanent rules

The possibility of offering employees tax‑free charging of electric vehicles at the workplace was introduced in 2023 as a temporary measure. The rules allowed charging of passenger cars (class I), light commercial vehicles, motorcycles, mopeds and bicycles without the employee being taxed on the electricity consumed, provided that the charging took place at a charging point made available by the employer in connection with the workplace.

The purpose at the time was to create incentives for the use of electric vehicles while also simplifying administration for employers. Through the most recent parliamentary decision, this tax exemption is now being made permanent, creating long‑term and predictable conditions for employers who wish to offer charging as an employee benefit. Simultaneously, the rules are being amended to better reflect how electric vehicles are used in practice, including by covering plug‑in hybrids in a clearer and more appropriate manner.

What do the extended rules mean for plug‑in hybrids?

The new rules may be of particular significance for employers with plug‑in hybrids in their vehicle fleets who have previously faced challenges in aligning their car and reimbursement policies with the applicable tax rules.

Under the previous framework, restrictions could arise for employees with plug‑in hybrid company cars. If the employer offered charging facilities at the workplace, the car was considered to have access to so‑called “free fuel”. This meant that the employer could not pay tax‑free mileage allowances for business travel, even if the journey was partly or entirely powered by a fuel other than electricity.

In practice, this has in many cases led employers to:

• choose not to offer charging for plug‑in hybrids
• be unable to pay tax‑free mileage allowances for business travel using a plug‑in hybrid that had been charged at the workplace

The new provisions change this position. For employees with a plug‑in hybrid company car, it is now clarified that fuel costs incurred in connection with business travel may be reimbursed through a tax‑free mileage allowance, even if the vehicle is charged with electricity provided by the employer at the workplace.

This means that charging at the workplace no longer excludes the possibility of paying tax‑free mileage allowances for business travel. The regulatory framework therefore becomes more logical, more accurate and significantly easier to apply in practice.

Important limitations that remain

At the same time, it is important to note that certain limitations will continue to apply even after the legislative changes. For fully electric vehicles (i.e. not plug‑in hybrids), the rule remains that tax‑free mileage allowances for fuel relating to business travel may not be paid where the employer provides charging at the workplace. The Government considers that the rules for fully electric vehicles should remain unchanged. Where the employer provides tax‑free charging at the workplace, it is in practice not possible to determine how much of the electricity relates to business travel.

To avoid complex assessments and the risk of double tax benefits, the restriction therefore remains that tax‑free mileage allowances may not be paid in these situations for fully electric vehicles. Furthermore, the tax exemption for charging continues to apply only to charging at the workplace. Charging that takes place at the employee’s home is not tax‑free, nor is charging where the workplace is located at the home, for example in the case of remote working.

Next steps for employers

In light of the new permanent and extended rules, it may be appropriate to:

• Review and update car and benefits policies, particularly if existing policies were designed around previous regulatory limitations.
• Inform affected employees about what applies. Clear communication reduces the risk of misunderstandings and facilitates correct application.
• Ensure correct payroll and accounting treatment. Even tax‑free benefits require proper configuration of payroll systems and procedures.
• View workplace charging as part of sustainability efforts. The new rules provide better support for combining employee benefits, cost control and climate objectives.

Get experts support from Azets

The regulations governing company cars and electric vehicle charging can be complex to navigate, and incorrect handling may result in unnecessary costs and administrative burden. Our experts can help you develop a clear and sustainable policy for company car benefits and charging reimbursements. Contact us today for advice.