For many Latvian companies, the car looks like a fixed cost that can't be cut. In reality, most of the expense comes not from the car itself, but from how the business manages it. This article breaks down what a company car truly costs, why those costs have risen in recent years – including Latvia's company car and vehicle operation taxes – and which strategies let a business genuinely save without losing mobility.
If your company runs anywhere from one to several dozen cars, transport costs quietly add up to far more than the fuel invoices suggest. It's worth looking at the full picture.
What makes up the cost of a business car?
Many companies equate the cost of a car with fuel and insurance. But the total cost of ownership is made up of far more components: purchase price, fuel, MTPL and CASCO insurance, servicing, tyre changes and storage, repairs, administration, annual vehicle taxes – and, often the largest yet least visible part, depreciation.
Depreciation is frequently the most painful line. A new mid-range car can lose a significant share of its value over the first few years – often thousands of euros – and this loss stays invisible on the books until the moment you sell. Unlike fuel or insurance, it never shows up as a single invoice, which makes it easy to underestimate.
Once all these components are added up, the vehicle fleet often becomes the second or third largest expense area in a company – simply split across many separate invoices that are hard to control.
Why has running a car become more expensive?
Even if your fleet hasn't changed, keeping it on the road has likely become more costly. There are several objective reasons.
First, vehicle taxes. According to the State Revenue Service (VID), companies pay the company car tax (UVTN) on passenger cars registered to a business and used in economic activity. Rates depend on engine power: for most cars first registered after 2009 the rate is set per kW, while other vehicles pay a flat €60 per month and pure electric cars pay just €15 per month. On top of that comes the annual vehicle operation tax, administered by the Road Traffic Safety Directorate (CSDD), which rose for many cars in 2025.
Second, insurance and repairs. Rising prices for car parts, repair labour, logistics and energy push up running costs across the board. Latvia's motor insurance segment is the largest part of the non-life market – around 39% of premiums – and insurers reported double-digit premium growth in early 2025. This hits companies whose fleets are ageing hardest – and according to the European Automobile Manufacturers' Association (ACEA), the Baltic states have some of the oldest car fleets in the EU, well above the EU average of roughly 12 years. Older vehicles need more frequent and more expensive repairs.
Third, the broader tax framework. As PwC's tax summary notes, Latvia taxes corporate profit at 20%, but only when it is distributed – which means the real cost of an owned car shows up gradually through depreciation, taxes and running costs rather than all at once.
The company car tax rules every Latvian business should know
The company car tax (UVTN) is one of the most relevant for businesses. According to VID, it applies to passenger cars registered to a company's ownership or possession and used in economic activity, including for employees' private needs.
There is an important nuance: a company can be exempt from UVTN if it declares in the CSDD register that the vehicle will be used exclusively for the company's economic activity. Electric vehicles also benefit from a substantially lower rate. In practice, this means that how a company obtains and uses a car – buying it, or using it as a service – can have different tax consequences.
Tax treatment depends on each company's specific situation, so it's worth consulting an accountant or tax advisor before making a decision. Current rules can always be checked on the State Revenue Service (vid.gov.lv) website.
💡 Wondering whether a rental model would suit your company? See how long-term car rental for business works – and what's included in a full-service lease.
7 ways to reduce business car costs
1. Start by measuring the true cost
You can't manage what you don't measure. The first step is to calculate what each car actually costs per year, including not just fuel but insurance, servicing, tyres, repairs, vehicle taxes and depreciation. Often it turns out that a few older cars cost more than newer ones – because of frequent repairs and higher fuel consumption.
2. Renew an ageing fleet
Newer cars typically use less fuel, break down less often and carry more safety systems. An ageing fleet looks cheaper only on paper – the real cost of repairs and downtime often outweighs the apparent saving.
3. Consolidate and automate expenses
Fuel cards, unified expense accounting and fleet management systems let you see all costs in one place. This makes it easy to spot inefficiencies – pricier fuel stations, poor routes or excess spending.
4. Outsource maintenance and administration
Every hour spent arranging insurance, scheduling servicing or administering claims is a hidden cost. Handing these processes to a service provider frees up internal resources – time and people – for your core business.
5. Replace variable costs with a fixed payment
An unexpected repair or a sudden insurance increase wrecks budget planning. Models built around a fixed monthly payment turn unpredictable costs into a single, foreseeable line – making financial planning easier across the whole contract term.
6. Match the car to real demand
Business mobility needs shift with seasonality, growth or project work. Solutions that let you easily add or return cars as needed help you avoid paying for idle vehicles and an oversized fleet.
7. Consider long-term rental as an alternative to ownership
For many companies, the biggest saving lies not in small optimisations but in the ownership model itself. Instead of buying a car and taking on all the associated risks, you can use it as a service with a fixed payment. When this makes more sense than an owned fleet, we cover in the next section.
Owned fleet or long-term rental – which to choose?
The core difference is who carries the risk. With an owned fleet, the company faces not only the upfront investment but also depreciation, unpredictable repairs, annual vehicle taxes and disposing of the car at the end of its life. With long-term rental, these risks pass to the service provider, and the company pays a fixed, known monthly fee.
This model suits businesses whose car needs change with growth or seasonality – the fleet can be scaled up or down without the hassle of selling. In practice it works like long-term car rental for business: the monthly fee includes insurance, technical maintenance, tyre changes and roadside assistance, so the company is left with a single function – using the car.
💡 Want to see which cars are available for your business? Browse the MyBee fleet and monthly rates.
How MyBee helps reduce car costs
MyBee is a long-term car rental solution built precisely for this model. Instead of many separate invoices, a company gets one fixed monthly payment that includes:
- insurance;
- regular technical maintenance;
- replacement of worn parts;
- tyre changes and storage;
- damage administration support;
- 24/7 roadside assistance.
The number of cars can be scaled up or down to fit business needs, with no long-term financial commitments. Learn more about why this service can be a cost-effective choice, or explore the business offers.
💡 Ready to look at concrete numbers? Leave a request – we'll prepare an individual offer for your fleet within 1 business day.
Frequently asked questions
Which part of car costs do businesses most often forget?
Most often it's depreciation. Unlike fuel or insurance, it never appears on an invoice and only becomes visible when you sell the car – even though it can amount to thousands of euros over a few years. That's why it's important to factor it in when planning.
Is long-term car rental cheaper than buying?
It depends on the company's situation. Rental avoids a large upfront investment, depreciation risk and administrative burden, turning costs into a fixed, predictable monthly payment. For many businesses, especially with changing needs, it's the more cost-effective solution.
What taxes apply to company cars in Latvia?
The main ones are the company car tax (UVTN), charged monthly based largely on engine power, and the annual vehicle operation tax. Electric vehicles enjoy lower rates, and exemptions may apply if a car is used exclusively for business. The specific impact should be checked with an accountant or the State Revenue Service (VID).
What does the monthly long-term rental fee include?
It depends on the provider and package, but it typically covers insurance, regular technical maintenance, tyre changes and storage, and roadside assistance. This replaces most separate car expenses with one predictable sum.
Want to know how much your company could save?
Every business is different, so the best solution is an individual one. Leave a request and we'll prepare an offer for your fleet within 1 business day. You can also simply browse the cars or read how long-term rental for business works.
Have questions? Get in touch directly – call +371 28233888 or email info@mybee.lv. Subscription inquiries: Monday–Friday, 8 AM–6 PM; roadside assistance and traffic incidents: 24/7.