Company car for private use: Savings potential or cost trap
It is not uncommon for well-traveled employees to enjoy a fancy company car that is available to them not only for business trips, but also for personal use. A lucrative bonus – provided the driver of the company car is aware of existing tax benefits and does not fall into hidden cost traps.
Of course, the tax authorities don't let their guard down when it comes to company cars either: under tax law, the free transfer of a company car for private use is a benefit in kind. This results in a non-cash benefit for the employee, which must be taxed.
The agony of choice: 1-percent regulation or logbook
The employee has a choice of two options for company car taxation: the one-percent rule or the driver's logbook.
The 1 percent rule:
With the one percent method according to § 6 para. 1 no. 4 S. 2 EStG, one percent of the gross list price of the vehicle is applied monthly. The current value of the car (age, condition, kilometers driven, accident damage, etc.) is not taken into account.).
If the employee also uses his company car for the daily trip to work, the flat-rate taxation increases by an additional 0.03 percent of the gross list price per distance kilometer of the one-way trip.
Logbook:
With the keeping of a logbook (§ 6 para. 1 no. 4 S. 3 EStG), the actual costs for the private use of the company vehicle are shown and taxed. The careful, proper recording of all personal and business travel is burdensome. Depending on driving habits, however, the logbook may be the more cost-effective option for the employee.
It should also be noted that it is not possible to switch between the one-percent rule and the logbook during the year. A change of method during the year is only possible if the vehicle is changed.
New savings potential: co-payment by employees reduces monetary advantageiL
If an employee pays part of the cost of the company car himself, this additional payment reduces the imputed income. Company car drivers to their delight, the Federal Fiscal Court confirmed in February 2017 that not only lump-sum, monthly payments to the employer, but also individual costs can be taken into account for tax purposes. This view has been confirmed in the BMF letter of 21. September 2017.
If the employee bears the entire fuel costs, insurance costs or maintenance costs himself, for example, he can claim these as income-related expenses for tax purposes.
Example: A uses his company car with a list price of 50.000 € also private. According to the one-percent rule, the imputed income from private use amounts to €500 per month. A drives 40 kilometers a day from his home to the office in his company car, which increases the imputed income by a further €600 to 1.100 € per month (13.200 per year). Within the scope of his tax return, A submits gasoline costs of 8.600 € as income-related expenses. This reduces the annual monetary benefit to 4.600 €.
Conclusion: If a company car for private use is a high-priced vehicle and you also have a relatively long way to work, the supposed bonus can quickly become a cost trap when taxed at a flat rate. Therefore, calculate in advance exactly which method is the more favorable for you.