Let's take a look at a topic from operational practice, which Taxation of a company car .
After the most important questions:
- Which car should it be?
- And how much additional equipment can I get into the car with my installment?
This is often followed by the somewhat sobering question:
- How is my company car actually taxed and what does the fun cost me in the end?
So that you don't fall over a few common pitfalls here, I have prepared them in the article. Small mistakes can cost you money under certain circumstances and may even lead to a company car being disadvantageous compared to a private purchase.
In addition, since the 1.1.2020with Hybrid and electric vehicles new regulations on subsidies that can significantly reduce the tax burden (see 3.2 for more details) .
With the Company Car Calculator you can calculate your tax burden from a company car on an ad hoc basis.
Table of contents
0. Company Car Calculator | Company Car Calculator
If you just want to quickly calculate the load or the tax effect of a company car, you can use this company car calculator. Below you will find further information and pitfalls that you should avoid at all costs.
Notice for electric and hybrid vehicles
For electric and hybrid vehicles, please note the corresponding information in the company car calculator, this will lead to the reduction of the Gross list price to 25% or 50% of the original value. However, please note the requirements that you can find below under 3.2. And also the pitfalls associated with it.
It is often mistakenly assumed (and unfortunately also communicated by dealers) that the lump-sum taxation is based on 0.5% or 0.25% instead of 1%, which is not true.
1. When is the company car actually taxed?
The first pitfall lurks even with this question, because a company car is always for one Whole month. So if you take over the company or company car on the 30th or 31st of a month, you have to pay tax on the entire month and not just the one day on a pro rata basis.
Pitfall 1
Make sure to use a company car if possible at the beginning of the month . Even if you may be allowed to use the car a day earlier. It may be possible to tax only a transfer of use, but more on that below more .
2. How is the company car taxed?
The company car is taxed either according to the Logbook method or according to the 1% regulation , which follows a "simple" formula. The following info video provides a brief overview of the topic:
(But you can also use the Company Car Calculator above to directly determine your burden from company car taxation.)
2.1 Logbook
No matter whether you are an entrepreneur, self-employed, freelancer or employee. Tax law allows everyone to cover the expenses for private and business/professional travel exactly to determine (§ 8.2 sentence 4 of the Income Tax Act), if the car is used for business purposes at least 50%.
Two conditions must be met for this:
Actual expenses
1.
The actual expenses for the company car must be determined
This procedure may still be practicable for the entrepreneur, as all receipts are collected and booked via the accounting department. For an employee, especially in larger companies, however, it will often fail because of this criterion, as a determination per vehicle will be associated with further internal effort and there is no willingness in the company to determine this in individual cases.
Nevertheless, it can make sense to keep a logbook. In particular, if these two conditions are cumulative, you should check the logbook method:
- The way 1st place of work/apartment is far away or there are many company trips.
- The gross list price is high, so that the flat-rate calculation leads to high taxation.
Timely and complete recording
2.
Journeys with the company car must be Recorded promptly and seamlessly and contain further detailed information. Especially for business/professional trips, e.g.:
- Date
- Goal
- Purpose
- Name of the business partners visited
- Mileage at the beginning and end of the trip
- In the case of longer detours, even the travel route may have to be indicated.
For private trips, on the other hand, the mileage and the kilometers driven are sufficient.
Pitfall 2
The logbook method supposedly looks like the best solution to keep company car taxation as low as possible. In practice, however, hardly anyone maintains the complete documentation of all journeys and thus risks high additional payments in the event of a tax audit. It is also irrelevant whether you use paper or one of the numerous logbook apps.
Only newer approaches via direct hardware in the car (e.g. via OBD ) can guarantee complete documentation. But here, too, the necessary assignment "private" or "business/professional") and proof of actual expenses remains.
2.2 The 1% rule | One percent rule
Flat-rate taxation via the 1% rule (§6 para. 1 no. 4 sentence 2 EStG) follows a simple formula: We will not go into the topic of "double housekeeping" and "family home trips" at this point). Let's take the formula apart:
| Gross list price (i.e. vehicle price + VAT) x 1% |
| + |
| Gross list price x 0.03% x km (one-way commute to work/home) |
So let's now turn to the tax base before we look at the 1% rule again in detail under 4. or directly in the Company Car Calculator above.
3. What do you actually have to pay taxes? - The (gross) list price
What sounds simple – the (Gross)List price of a vehicle – can be complicated in practice, depending on the leasing contract and vehicle type (combustion engine, electric or hybrid).
But first things first:
What actually belongs to the gross list price and how is it determined?
3.1 Gross list price - the standard
If you want to determine the gross list price, you can have this information confirmed by the car dealer or calculate it yourself. In principle, the (gross) list price of the company car includes all ex works Permanently installed components of the car, i.e. also the optional equipment, if it has been permanently installed in the vehicle, which will be the rule. The only exceptions to this rule are
- Car phones and hands-free systems
Although usually permanently installed, the tax exemption according to §3 No.45 EStG . However, you should make sure that the dealer really deducts the hands-free system from the gross list price or at least shows it separately.
However, e.g. not at the gross list price:
- Transfer costs and registration costs
- Spare tyres and rims, e.g. for summer/winter tyres
- Portable navigation devices not permanently installed
- a retrofitted gas tank
Gross means including VAT.
The gross list price is also rounded down to the full hundred. For example, from EUR 43,397 to EUR 43,300.
Pitfall 3
A tax auditor likes to call the dealer once in a while and Requested the gross list price of a company car. Due to regular price increases by car manufacturers, this will then regularly be higher than the gross list price on which it is based.
Proof of the gross list price should therefore be confirmed by the dealer at the beginning of the lease or at the time of purchase. This makes it easier to provide evidence during the tax audit and prevents discussions.
3.2 The gross list price for electric and hybrid vehicles
It has been interesting since the year 201950% reduction in the gross list price for all-electric vehicles and hybrid vehicles. From the year 2020this even increased by 75% for pure electric vehicles. Since 2024the gross list price was also increased from EUR 40,000 to 70.000 EUR (and possibly in 2025to EUR 95,000) This measure is intended to promote electromobility in particular. The incentive is very interesting for all new registrations. Especially since the starting point is the gross list price. This reduces the burden via the 1% lump-sum taxation and the 0.03% per kilometre of distance from home/place of work in some cases considerably. Unfortunately, there are also two pitfalls to be aware of.
Hint: The regulation is initially to be implemented by the year 2030be valid.
Pitfall 4
In order that Hybrid vehicles 50% reduction, you must meet certain conditions set out in the Section 3 (2) No. 1 or 2 of the Electric Mobility Act The following are recorded:
- A carbon dioxide emission of < 50 grams per kilometre driven
- range of electric drive from >= 40 km
Here, too, experience shows that sellers and dealers like to advertise with half the gross list price, but do not know the exact values when asked. You should therefore ask for this in advance or even better: have it confirmed in writing.
In addition, the addition of Extras and the associated increase in the weight of the vehicle can lead to a lower range and higher carbon monoxide emissions. In practice, however, an income tax inspector will probably not carry out a more in-depth audit if the written confirmation from the dealer is available.
Pitfall 5
In the case of pure Electric vehicles reduction of the gross list price to 0.25% of this <= 70,000 EUR amount to. Just a single euro above that and the taxation will be 50% of the gross list price. (The good news, however, is that this amount is to be increased to EUR >95,000 from 1 January 2025)
Here is an example of the monetary benefit for the three variants since 2024.
gross list price EUR 70,000 each; Kilometers from the home/workplace: 20km
| Petrol engine | Hybrid | Electric | |
| Gross list price (original) | 70.000 EUR | 70.000 EUR | 70.000 EUR |
| of which to be taken into account | 100% | 50% | 25% |
| Gross list price (non-cash benefit) | 70.000 EUR | 35.000 EUR | 17.500 EUR |
| Consideration of the 1% rule | 700 EUR | 350 EUR | EUR175 |
| Consideration 0.03% home/workplace | 420 EUR | 210 EUR 210 | 105 EUR |
| = taxable non-cash benefit per month | 1.120 EUR | 560 EUR 560 | 280 EUR |
| Personal tax rate | 30% | 30% | 30% |
| = Tax burden per month | EUR336 | 168 EUR | 84 EUR |
| Tax savings compared to gasoline cars | 0 EUR | 168 EUR | 252 EUR 252 |
The example shows quite well that if you choose an electric car or hybrid vehicle, you can save between 168 EUR and 252 EUR per month. For an accurate calculation of your situation, please use the Company Car Calculator | Company Car Calculator below to this article.
Please think in the Company Car Calculator to the appropriate marking of the gross list price, so that the effect of 50% in the case of a hybrid car and 75% in the case of an electric car is taken into account.
Take the time in the Company Car Calculator to calculate individual case studies and vehicles and to determine your personal tax burden due to the new funding opportunities.
3.3 The gross list price for pool vehicles
And what is the gross list price if I can only choose from one vehicle pool ?
There is also an answer to this question. In this case, the employer has a Average via all gross list prices of the vehicle pool. If necessary, it makes sense to only specify certain vehicle classes in the lease agreement and thus to exclude very expensive pool vehicles. Then it should also be possible to use the average of a vehicle class.
3.4 The gross list price for used cars
And what is the gross list price if I have a used car?
You might think that a used car is valued at the gross list price at market value and that this reduces the tax burden. Unfortunately, however, this is not so. Even for a used car with a market value of perhaps EUR 25,000, the original gross list price of e.g. EUR 80,000 should be applied (See judgment of the Federal Fiscal Court, dated 13.12.2012). However, if you have a Young or Oldtimer as a company car, may still enjoy the original gross list price. However, since this case is more likely to affect the shareholder-managing director, who is free to determine the company car himself and also has some pitfalls, this topic will be dealt with separately below under 5.
3.5 Private co-payments and the gross list price
How do private co-payments actually affect my gross list price?
Sometimes the employer allows the employee to configure his company car himself within certain limits. If the limits are exceeded, the employee may have the opportunity to purchase special equipment under private co-payment yourself, such as the Sportsback or the trailer hitch. This, of course, increases the gross list price and the employee would be doubly "punished". Once through the co-payment and then because of the higher monetary advantage. But don't worry, it's not quite that bad. The co-payment made will be credited to the non-cash benefit.
Example - Treatment of non-cash benefit in the case of private co-payment
Gross list price 40.000 EUR
Private co-payment: 10,000 EUR
The gross list price is EUR 50,000 after additional payment
Of which 1% = 500 EUR/ month
Year | Amount of co-payment | Offsetting with non-cash benefit |
Year 1 | EUR 10,000 | – 6,000 EUR (12 months x 500 EUR) |
Year 2 | 4.000 EUR | – 4,000 EUR (8 months x 500 EUR) |
Year 3 | 0 |
In the 1st year, there is no taxation, as the EUR 10,000 private co-payment is offset. In the 2nd year, another 8 months can be offset before the co-payment is used up. It is not until September of year 2 that the regular lump-sum taxation of EUR 500 takes place.
Pitfall 6
In the case of private co-payments, be sure to point out that the offsetting is made against the non-cash benefit. This regulation is not always known. Although you also have the option of correcting this as part of your income tax return, you will only receive the tax advantage downstream.
4. The 1% lump-sum taxation in detail
4.1 How does the 1% rule actually work?
Once the gross list price with all its special features has been determined, the 1% rule applies. This is to pay tax on the non-cash benefit that an employee has if he or she can also use the company or company car privately. The rate of 1% results from the law (§6 para.1 no.4 sentence 2 EStG) . For your specific case, you can see the impact below in the Company Car Calculator determine.
"Wait a minute, what if my employer ruled this out?"
Then there is indeed no taxation. However, this is only the solution if it is true. Otherwise, you are in tax evasion and are liable to prosecution. In addition, the employer will be obliged to monitor the ban on private use. For example, through complete logbooks. For the employer, there is therefore considerable tax risk potential, even if the company car is only occasionally made available for private purposes.
Pitfall 7
Too occasional trips of the employee with a purely business company car trigger lump-sum taxation. The situation is different only if the assignment does not exceed 5 calendar days a month Takes place. But even then, there will still be 0,001% of the gross list price per kilometre driven (but capped at the lump-sum taxation). If an income tax inspector discovers such a case, the tax claim first falls on the employer, who then passes it on to the employee.
Not for occasional use and thus it is possible if the employee takes the car home with him in order to receive a Business trip directly. See also 2.2 of the BMF letter of 4 April 2018
4.2 What is the 0.03% per kilometer traveled ?
The often expensive part of company car taxation is not the 1% rule, but the further flat-rate taxation of the distance to work or first place of work/residence. Especially for commuters who travel 50, 100 or even more kilometers a day, it can be so expensive that the company car is no longer worthwhile compared to a private car. This is based on the shortest usable road connection, even if you actually take a longer but faster route. Route determination can be used, for example, with Google Maps at. The workplace must be able to First place of work be. So if you are in the field and have a so-called Assignment change activity you may not have a primary place of work and do not have to pay tax on the 0.03%.
Pitfall 8
Do I really not have a first place of work? If you make an incorrect assessment here, an income tax audit may uncover considerable additional claims. You should therefore consider the criteria of the first place of work (§9 para. 4 EStG) go through:
Am I assigned to a fixed company facility according to the provisions of service and labor law? Many will be able to answer this with "yes", as you are usually assigned to a branch, office or production facility in the employment contract. If your activity is really primarily planned as a change of assignment, e.g. as a sales representative, consultant, sales representative, etc., then this should also be clearly regulated in the employment contract.
What is the amount of time I spend there?
- Typically working day
- Two full working days per week
- 1/3 of the agreed regular working hours
PRACTICAL NOTE
Ask your employer to give you a side agreement to the employment contract that clearly regulates the change of assignment activity or the home office. I have attached a sample form here.
4.3 What other option is there instead of the 0.03% per km?
What many people don't know is that, in addition to the 0.03% of the gross list price regulation, there is another way to tax the journeys between the home and the first place of work.
This so-called Individual assessment (BMF letter of 4.4.2018, BStBl 2018 I p. 592) with 0.002% of the gross list price x kilometre home-workplace can be applied under the following conditions:
The vehicle will be delivered at most to 180 days used for private trips
For each calendar month, the employer must written be communicated at which Conferences (with date) the vehicle was actually used for journeys between home and work
The employer must Wage tax deduction according to the information received
The employer must reduce the limitation to 180 days per year (not 15 days per month).
In practice, this method is usually hardly encountered due to the limitation to 180 days and the increased administrative burden. However, it can make sense to choose this method as part of your income tax return.
4.4 What about company car taxation if I only drive a few kilometers to the "Park and Ride" parking lot?
In principle, the entire distance is also taxable on this, even if only the part of the distance is covered. Unjust? Yes, but there is a way out:
1.)
The Employer only makes the car available for the part of the journey from home to the Park and Ride car park or public transport. But this will regularly be impractical. After all, who doesn't make a detour to daycare, school, etc and after work to the supermarket before starting work?
2.)
The Employee provides the Proof of use of the other means of transport (annual, monthly or single tickets). This will usually be the case, so that the shorter route can be used. But this will regularly be impractical. After all, who doesn't make a detour to daycare, school, etc and after work to the supermarket before starting work?
4.5 What happens if I pay my employer something for private use?
If you pay a lump sum for private use as part of an employment or service contract provision, this must be deducted from the non-cash benefit.
The BMF letter explicitly mentions:
- Monthly Flat Rates
- Mileage allowances
- Lease instalments taken over
- And vehicle costs (e.g. for fuel, cleaning, lubricating oils, Adblue, etc.)
If you calculate your charges with the company car calculator above, you should deduct the co-payments or private usage allowances from the non-cash benefit.
5. Company and company cars for shareholder-managing directors
The above basically also applies to the shareholder-managing director of a GmbH. Especially if you are the sole shareholder, however, you usually have a lot of room for manoeuvre. Is it perhaps even possible to run the company car completely through the company? Even finance the sports car or classic car through the company? Such ideas are not new and therefore there is quite a bit of (financial) case law on the subject. But first things first.
5.1 Two company cars or an entire fleet of vehicles
If you own an entire fleet, you have to subject every vehicle to 1 percent taxation. Unless you can prove the use of a flawlessly kept logbook for each vehicle without gaps and with all the necessary information. ( See also the judgment of the Federal Fiscal Court of. 24.5.2019, VI B 101/18 .)
The reason that you pay tax on the most expensive vehicle and you can only use one at a time was not accepted by the court.
5.2 Classic cars
It seems particularly interesting to use a classic car as a company car due to the historical gross list price. The vehicle has charm and the costs for necessary repairs and restoration are deductible as operating expenses. But unfortunately, things are not quite that simple here either.
If you buy a classic car for 100,000 EUR with an original list price of 30,000 DM or 15,000 EUR rounded, you can generally apply the gross list price at first registration. The 1% rule is basically based on the 15,000 EUR. Nevertheless, there is a risk that the tax office will not use the historical gross list price, but the purchase price of the vehicle. In this case, the market price would be the value to be used. The legal basis for this could be the analogy with a judgment on the valuation of 'imported vehicles'. see Federal Fiscal Court of 9.11.2017, III R 20/16):
This legal case concerned a Ford Mustang Shelby GT 500 Coupé. The taxpayer had purchased it for EUR 79 thousand, but had stated the lower American list price of EUR 54 thousand. In the end, the car was valued at the car dealer's purchase price of 76 thousand euros. The comparison with the classic car is obvious.
Actually, there is no longer a reliable price for the classic car either, as it can no longer be purchased for a new price of 30,000 DM, but only at a much higher market price. If a tax auditor follows this analogy, the tax-saving model will boomerang and stress is inevitable.
But disaster can also threaten from another side. Namely the Costs for maintenance and restoration .
It is often noted that the high costs for restoration, repair and accommodation do not serve the business and are therefore considered unreasonable. The classic car is attributed to the private lifestyle and thus to the "representation expenses" and is added back to the profit (See also §4 para. 5 sentence 1 no. 4 EStG) . You can read about this e.g. in the Judgment of the Tax Court of Baden-Württemberg of 28.02.2011, 6 K 2473/09
6. Conclusion
As you can see, there are some pitfalls and peculiarities when it comes to vehicle taxation. However, if you consider these in advance, you can avoid considerable tax burdens and surprises during the wage tax audit. The lower taxation of hybrid and electric vehicles can also be interesting for many, if the ancillary conditions are observed.
In addition to calculating the tax burden via the company car calculator | company car calculator also offers some aids, such as the "home office regulation" (see 4.2).
If you do not use the company car as a self-employed person but as an employee, you should discuss some conditions with your employer in advance, such as recording the vehicle costs if you wish to keep a logbook (see 2.1) or determining the 1st place of work (see 4.2).
We are happy to find out what a cooperation can look like and how we can do it for you in a free and non-binding introductory meeting.
Duration: 30 min.
