Company car
The terms company car or company car are not legally defined. Usually, the terms in tax law are used in connection with the private use of a company-made car. A company car can also be a car with or without a driver ( chauffeur ), which is provided to state representatives (ministers, heads of authorities) for official (and private) purposes; private use is usually to be recorded in a comprehensible manner.
It is regularly contractually agreed that company cars must be returned upon release or termination of an employment relationship . If the company car is damaged, the employee can be obliged to reimburse costs according to the principles of employee liability .
Income tax
Self-employed
The classification as a company car requires that it belongs to the taxable business assets . A car can be assigned to business assets if the operational use is at least 10% but not more than 50%. A car must be assigned to business assets if the operational share of use exceeds 50%. The journeys between home and business premises count towards business use. The usage shares can be made credible using suitable records, without these records having to meet the strict requirements of a logbook. As a rule, it is sufficient that the operational share of usage is derived from the appointment calendar, invoices to clients or records over a representative period of three months. For some occupational groups (e.g. taxi drivers, sales representatives, building tradesmen), an operational share of more than 50% is typically assumed. In individual cases, the use of a sports car can lead to non-deductible entertainment expenses within the meaning of Section 4 (5) sentence 1 no. 7 EStG .
1% rule
In principle, for every company car that is used more than 50% for business purposes and for which no proper logbook is kept, a private share in accordance with the 1% rule is to be applied. The private use is typically assumed (prima facie evidence). In various cases, jurisprudence and tax authorities assume that the prima facie evidence has been refuted and that the private share cannot be used:
- A private vehicle with a comparable status and utility is available for private purposes.
- The vehicle is also given to an employee for his or her private use. In these cases, however, the 1% rule applies to the employee in the context of payroll accounting if no logbook is kept.
- The entrepreneur can make credible that the car is not suitable for private use (e.g. workshop trolleys).
- A noteworthy private use by the entrepreneur is ruled out due to the operational allocation decision (examples: demonstration vehicles of a vehicle dealer, vehicles intended for rental, vehicles of self-employed who only perform their services with a vehicle or who do not have a permanent local facility).
In the last two groups of cases, the self-employed must pay tax on at least a private share for the vehicle with the highest gross list price if no equivalent vehicle is available for private purposes. In the case of shared use by spouses, children of legal age and other closely related persons, an additional private share must be added for each car used, starting with the next highest gross list price.
According to the 1% rule, the monthly private use is 1% of the gross list price rounded down to a full hundred at the time of first registration plus special equipment according to Section 6 Paragraph 1 No. 4 Sentence 2 EStG . The gross list price is equivalent to the manufacturer's recommended retail price and includes sales tax.
For purely battery-operated electric vehicles and plug-in hybrid vehicles, the list price is reduced by a certain amount per kWh of battery capacity up to a defined maximum amount. In order to take into account the assumed development progress in battery technology, the deductible amount is reduced by € 50 per kWh per year and the maximum amount by € 500:
| Year of first registration | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|---|---|
| Compensation for disadvantages per kWh of battery capacity | 500 € | 450 € | 400 € | € 350 | € 300 | 250 € | € 200 | 150 € | 100 € | 50 € |
| Maximum amount | € 10,000 | € 9,500 | € 9,000 | € 8,500 | € 8,000 | € 7,500 | € 7,000 | € 6,500 | € 6,000 | € 5,500 |
| Battery capacity | 20 kWh | 21 kWh | 21 kWh | 24 kWh | 27 kWh | 30 kWh | 35 kWh | 43 kWh | 60 kWh | 110 kWh |
For an electric vehicle with a battery capacity of 30 kWh and a gross list price of € 23,270 for 2016, the following calculation would result:
| calculation | Amount (euro) |
|---|---|
| Gross domestic list price of the vehicle (*) | 23,270.00 |
| rounded down to a full € 100 | 23,200.00 |
| Less compensation for disadvantages for electric vehicles | −8,500.00 |
| Calculation basis | 14,700.00 |
| thereof 1% per month = taxable private share | 147.00 |
If the car is also used for journeys between the home and the business premises, the deduction of the vehicle costs that are attributable to these journeys is limited to the distance flat rate. The self-employed should be treated on an equal footing with employees. As part of the 1% rule, the monthly value of journeys between home and business premises is set at 0.03% of the gross list price plus special equipment per kilometer distance. This value will be reduced by the distance flat rate. The remaining amount is to be added to the profit as a non-deductible business expense in accordance with Section 4 (5) No. 6 EStG . This addition takes place off-balance sheet and is therefore, unlike the value of private car use, not to be recorded as a withdrawal. Instead of the monthly value of 0.03%, employees can calculate the monetary benefit for journeys between home and place of work in the amount of 0.002% per journey. Whether this method, contrary to the administrative opinion, can also be applied to the determination of profits for the self-employed has not yet been clarified by the supreme court (as of 2016).
For the period from January 1, 2019 to December 31, 2021, the rate was reduced from 1% to 0.5% for newly registered electric vehicles or plug-in hybrid vehicles, this is intended to promote electric mobility. In the case of plug-in hybrid vehicles, the same rule applies as for the E-license plate, so that the vehicle has a carbon dioxide emission of no more than 50 grams per kilometer driven or its range is at least 40 kilometers using the electric drive only.
Logbook
If the entrepreneur keeps a proper logbook for the vehicle, the private share of the total costs is based on the ratio of the privately driven kilometers to the total mileage. A logbook must be kept promptly and in a closed form. It must show the journeys, including the total number of kilometers reached at the end, in full and continuously. The following minimum information is required:
- Date and mileage at the beginning and end of each individual business or professional trip,
- the exact travel destination (places or street names are usually not sufficient),
- Purpose of the trip and business partners visited,
- Records of detours.
An electronic logbook can also meet these requirements. For this purpose, subsequent changes to the data must be excluded or at least documented. A change between the logbook method and the 1% rule is only possible at the turn of the year or when changing the car.
estimate
If no logbook is kept for company vehicles whose operational use is between 10% and 50%, the private share must be estimated. It should be noted that even with a low operational use of only slightly more than 10%, sales proceeds or insurance compensation in the event of an accident are always taxed at 100% as operating income. On the other hand, the commercial use of private cars in the amount of 0.30 € per kilometer driven can also be claimed by way of the usage contribution. The estimate of the private share in company cars is therefore of secondary importance in practice.
Workers
General
In the case of employees, too, it is typically assumed that a leased car can be used for private trips. This presumption is refuted if the employer pronounces a private use ban and actually monitors and enforces it. It is unclear whether employees can refute the prima facie evidence if a car of the same status and utility is available for private trips. While the VIII. Senate of the Federal Fiscal Court affirmed this for the determination of profits for the self-employed, according to a decision of the VI. Senate very questionable whether the judgment principles of the 8th Senate can be transferred to employees.
In the case of employees, private use is to be assessed as a pecuniary benefit in the context of payroll accounting and is subject to both wage tax deduction and social insurance. The monetary benefit is added to the gross cash wages for the purpose of calculating the taxes and then deducted from the net earnings. At the employer, the double recording of expenses as personnel expenses and vehicle costs is neutralized by including income from offset payments in kind in the amount of the monetary benefit.
The value of private use is to be calculated either using the logbook method or the 1% rule. The monetary benefit from private use also includes journeys between your home and your first place of work. For this purpose, 0.03% of the gross list price per distance kilometer must be added per month within the framework of the 1% rule. Alternatively, the surcharge can also be calculated at 0.002% of the gross list price per actual trip and distance kilometers between home and first place of work.
Reduction of the monetary benefit
The part of the travel expenses to be counted as income- related expenses can be taxed at a flat rate like a travel allowance - in this respect, no social security contributions have to be paid. The flat-rate wage tax can either be paid by the employer or passed on to the employee. Insofar as the travel costs to work are taxed at a flat rate, the flat rate for distance travel cannot be used as income-related expenses. The employee's participation in the cost of the vehicle also reduces the monetary benefit.
Calculation example 1% regulation
An employee may use a car with a list price of € 23,270 including special equipment and sales tax for private trips and trips between home and first place of work. The distance between home and first place of work is 30 km. The option of taxing journeys between home and first place of work at a flat rate is exhausted.
| calculation | Amount (euro) |
|---|---|
| Gross domestic list price of the vehicle (*) | 23,270.00 |
| rounded down to a full € 100 | 23,200.00 |
| thereof 1% per month | 232.00 |
| + 0.03% per km distance to work (here: 30 km) | 208.80 |
| = monetary benefit | 440.80 |
| ./. flat-rate taxed travel costs (30 km / day * 0.30 € / km * 15 days (usual)) |
−135.00 |
| ./. private cost sharing | −100.00 |
| = taxable pecuniary benefit | 205.80 |
This amount covers the proportional total costs of the vehicle for private trips. This includes depreciation , interest, accident damage, vehicle tax, insurance, fuels, oils, maintenance, repairs and garage rental at the place of residence.
A 15% flat-rate wage tax + solidarity surcharge + possibly church tax apply to the travel expenses . In return, both the employer and the employee save around 21% on social security contributions , provided that the employee's wages are below the income threshold .
value added tax
Private use by entrepreneurs
In terms of sales tax, the private use of a company car by the entrepreneur or persons close to him regularly triggers a free tax . Fundamental differences to the income tax classification arise if the vehicle is not assigned to both the income tax business assets and the sales tax corporate assets . For example, if a car that was initially used exclusively for private purposes is only used later in the context of a business activity, it is no longer possible to assign it to company assets for VAT purposes. On the other hand, the allocation to business assets is also possible retrospectively per deposit if the usage share is at least 10%, and it is mandatory if the usage share is more than 50%.
Although the sales tax law contains separate valuation regulations for free value taxes, the tax authorities allow for the sake of simplicity to adopt the amounts determined for income tax using the logbook method or the 1% rule. However, the sales tax assessment base must be reduced by expenses not charged with input tax (e.g. insurance, vehicle tax, fees). If the 1% rule is applied, a flat-rate discount of 20% is applied. The remaining 80% is the VAT assessment basis, also known as the net value. The flat-rate income tax reduction of the private share for electric and plug-in hybrid vehicles is not applicable for sales tax purposes. Trips between home and business premises count towards business use and do not increase sales tax.
Transfer to employees
Sales tax law assesses the provision of a car to employees as a turnover similar to an exchange. The entrepreneur provides a service in the form of a transfer of use and receives the work performed by the employee in return. The private use of a car is therefore not a free taxation. There is no reduction in the assessment base for costs not charged with input tax.
If the monetary benefit is assessed according to the 1% rule for income tax purposes, this value - including a surcharge for trips between home and first place of work - can in principle also be used for sales tax. In contrast to the entrepreneur, the value determined by the 1% rule is the gross amount, so that the sales tax has to be deducted. According to the logbook method, the proportional total costs for private trips and trips between home and first place of work are a net value. The lump-sum income tax reduction in the monetary benefit for electric and plug-in hybrid vehicles is not applicable for sales tax purposes.
Criticism of the tax treatment of company cars
Environmental associations in particular criticize the current regulations on the taxation of company cars as unsocial and ecologically questionable. Thanks to the 1% rule and the frequently practiced assumption of all operating costs by the employer, users of company cars could drive a car at a fixed price. This leads to excessive use with a corresponding burden on the environment. Since the highest tax savings benefit employees with the highest tax rates (“ company car privilege ”), the Council of Experts for the Assessment of Macroeconomic Development also sees taxation practices as critical from the point of view of distribution and recommends a corresponding reform.
In a study commissioned by the Federal Environment Ministry , the current rules are described as the "largest tax break in Germany" and various reform models are discussed that could reduce subsidies by 3.3 to 5.5 billion euros.
See also
literature
- L. Diekmann, E. Gerhards, S. Klinski, B. Meyer, S. Schmidt, M. Thöne: Tax treatment of company cars in Germany. (= FiFo reports. No. 13). FiFo, Cologne 2011. (foes.de)
- Johannes Urban: Current problems with the taxation of company cars. In: NJW . 2011, pp. 2465-2470.
- Advice on company car and mobility management 2014. Edited by Ebner Stolz, EcoLibro, LeasePlan Germany, Volkswagen Automobile Stuttgart and FAZ Institute for Management, Market and Media Information. Frankfurt 2014, DNB 1052610684 .
Web links
- Deutschlandfunk.de , background , January 9, 2016: Right of way for gas guzzlers - at the expense of the climate.
- administration regulations-im-internet.de: Guidelines for the use of company vehicles in the federal administration (DKfzR).
- Germany subsidizes every company car with an average of 2,426 euros. Only in Portugal and Belgium are these tax subsidies even higher. In: Zeit.de . October 7, 2014.
Individual evidence
- ↑ Company car, 1% rule, compensation for disadvantages for electric vehicles
- ↑ negative: FG Düsseldorf July 24, 2014 11 K 1586/13 F
- ↑ Halving the monetary benefit for electric company cars from 2019
- ↑ BFH, judgment of December 4, 2012, Az. VIII R 42/09 and BFH, judgment of March 21, 2013 Az. VI R 31/10
- ↑ BFH, judgment of 11/30/2016 - VI R 2/15
- ↑ Climate Alliance Germany, 2011 die-klima-allianz.de: Position Paper: Reform of company car taxation
- ↑ Expert Council for the Assessment of Macroeconomic Development , 2011, sachverstaendigenrat-wirtschaft.de: Taking responsibility for Europe . Annual report 2011/12, p. 212.
- ^ L. Diekmann, E. Gerhards, S. Klinski, B. Meyer, S. Schmidt, M. Thöne: Tax treatment of company cars in Germany. (= FiFo reports. No. 13). FiFo, Cologne 2011. (foes.de)
