A company car is one of the monetary advantages that employers grant their employees. But self-employed usually use only a car for professional and private, which therefore also falls under the company car scheme. The monetary advantage of the private use of a tax-privileged car is in turn taxable. There are two options for keeping a logbook or choosing the 1% rule.
Some companies offer their employees a company car instead of a salary increase. This can usually be used privately as well. But the personal use of a car provided by the company brings a pecuniary advantage. This monetary advantage must be taxed according to legislation. The decisive factor, however, is that only the proportion of the car is taxed, which is also used privately. The company car calculator helps to determine this share.
Company car calculator: logbook and flat rate tax
If users of company cars do not have a logbook, the calculation of the pecuniary advantage follows legally stipulated values: A lump sum of 1% of the gross list price of the car is used (important: this price is the original price of the car in Germany). The value determined corresponds to the monthly private benefit or the pecuniary advantage.
Impact on net pay
The company car calculator also calculates the reduced net income from the calculated monetary benefit and your gross salary. This makes it easy to understand what impact the company car has on your net salary.
Advantages of a company car
The self-employed generally only use one vehicle for all their journeys. Employees can also use the company car for their private trips. This means they can shop with them or go on holiday and of course bring the little ones to school or take a trip with the family. They do not have to worry about the TÜV, the insurance or workshop appointments. Likewise, they do not have to pay for a car out of their own income. All these are monetary benefits that need to be taxed. The vehicle remains – if employer put a company car – their property in self-employed he belongs to the company’s assets and is subject to the company (tax-privileged) depreciation.
Company car calculator: How much does the private use of a company car cost??
There are two ways of calculating the benefit in kind for the company car: the travel expense report and the 1% regulation (list price regulation). The 1% regulation may only be used for wagons, these will predominantly (more than 50%) be used operationally. The rule of thumb is: If you are often traveling privately with the company car, its use with the logbook can be more expensive. For the 1% rule, a flat rate of one percent of the list price is taxed on a monthly basis. The list price is the recommended price of the manufacturer at the time of the first registration of the vehicle, it applies without dealer discount and also for used cars. In addition, a flat rate of 0.03% of the list price for each kilometer of travel between home and work. However, if there are less than 15 trips to the workplace per month, only 0.002% of the list price will be considered a pecuniary advantage. For sales representatives, this can be expected, if they rarely drive to the office. The self-employed must note that they also have to pay the VAT on 80% of the amount according to the 1% method. Of course, this 1% regulation only pays off for users who actually use the company car in a relatively private way. The second option of the calculation is the logbook, which shows the actual costs. With a private use of the company car under 50% it is prescribed, with use over 50% it can be led, but brings the disadvantage of the high expenditure with itself: Every journey is to note down meticulously. The following facts must be included:
- Date of the journey
- Mileage at the beginning and end
- Route and destination
- purpose of the journey
- Name of the interlocutor (during business trips)
There are log books in the stationery shop in standard execution, they must have been run without gaps during the presentation and have all pages. The tax office scrupulously controls and, in case of doubt, does not recognize the service kilometers or calculates a lump sum to the detriment of the driver.
Electronic travel books
For some years, there are electronic logbooks that are advertised as a tax-safe, but not always. In case of doubt, it is advisable to consult the tax consultant or even the tax office. If you use them, you will certainly benefit greatly, since the electronic logbook will simply be connected to the on-board diagnostic system that all vehicles from 2004 onwards will bring. Electronic travel books are currently a bit more expensive than a navigation device, but for sales representatives or self-employed they certainly worthwhile.
Company car: legal
Employees must know that their employer can provide the company car, but can contractually exclude his private use. On the other hand, a company car is an important means for employers to retain good employees, conversely, employees can bring it into play as an alternative to salary increase in negotiations with their boss. Some employers take on the (business) fuel costs, but this is not a must. The registration and insurance, workshop costs, inspections, tire changes and TÜV are the responsibility of the employer – even if the employee takes care of the handling of these things. The company car is always the property of the employer. Therefore, this is also basically for damage to the vehicle, but not for damage as a result of a private trip and not in case of damage caused by gross negligence or even deliberate damage.
Logbook for intensive business use
The keeping of a logbook is recommended to all who use their company car very intensively on business. Only in this way can the actual share of private use of the car be demonstrated. The depreciation, fuel and workshop costs of the logbook solution are divided according to the actual proportion of private trips in relation to the proportion of business trips.
FAQ – Frequently asked questions:
How does the 1% regulation work??
The 1% regulation is one of the two ways to tax private travel with a company car. The other variant is the logbook.
When can the 1% be applied??
Employees can still fully apply the 1% rule, but non-employees only if they use the vehicle at least halfway operational (based on mileage). This regulation has been valid since 2006. Operational use is also the journey between the home and the workplace as well as the drive home to the family with a double housekeeping. The tax office can demand proof of operational use. In addition, employees or self-employed persons with sufficient use may be obliged to keep a logbook if the Road Traffic Authority has issued a requirement in accordance with § 31a StVZO. This sometimes happens after serious traffic violations. If the driver concerned then uses a company car, he can immediately use the logbook for billing. The condition in question is granted, inter alia, if after a traffic violation the driver could not be identified – in the case of company cars a thoroughly plausible scenario. So that the authority does not have to make time-consuming investigations, and in order to prevent future violations, it then orders the keeping of the logbook.
Calculation of the tax according to the 1% regulation
In common usage, the 1% rule is called “list price method” because of the calculation basis. For income tax, 1% of the gross list price of the company car concerned is added to the monthly salary. It is in the use of the company car to a monetary advantage, which is taxable. This is done by increasing the gross salary by this amount. Why just 1% is chosen as a basis, is related to the usual depreciation rates on company cars. It is assumed that the user of the company car would have to save about this amount monthly for the purchase of their own vehicle. The income tax increases with it, even the tax rate rises slightly by the tax progression. An increased income tax reduces the net income. The gross list price of the vehicle is so called because it is taken from the price list of this car (manufacturer’s EIA). It does not include the actual cost of purchase, which may include a discount. This method was introduced so that a financial officer does not first have to study invoices for the purchase of the car. He just looks in the price list.
Practical example of the 1% regulation
In practical terms, the company car could cost 27,000 euros, which is why its user has to pay an additional 270 euros per month. In addition, 0.03% of the list price per distance kilometer is taxed between place of work and place of residence. Thus, the private trips with the company car such as vacation trips, home trips or a trip for lunch are compensated. If a company car user earns 3,000 euros gross, the company car has cost the aforementioned 27,000 euros and a commute is additionally taxed at 121.50 euros, the person concerned pays income tax to 3,391.50 euros.
How do I run a logbook?
Anyone who does not primarily use a company car as an employee or self-employed person must keep a logbook for proof of the taxable private share in the use. This seems expensive, but is required by the tax office. In addition, it may be worthwhile for frequent travelers even if the private share of use is so low that the alternative 1% scheme would be less favorable for tax purposes.
When is a logbook to lead?
Company car users would have the option to use the 1% rule if they were predominantly used (over 50% of the kilometers driven). However, this only has a flat rate, while the logbook determines the actual share of private use of the car. If a driver applies the 1% rule, the tax office can request proof of the scope of use. Also for this reason, keeping a logbook can be advantageous. In addition, it is worthwhile if the total cost of a company car is low, this may have already written off or immediately purchased as a used car. On the other hand, anyone who, as a self-employed person, acquires a very expensive vehicle and is thus predominantly on the job, can drive more cheaply with the 1% regulation.
Driving the logbook
The logbook shows exactly which journey – with how many kilometers – was undertaken in business or private. The user should pay this proof for the private trips – the pecuniary advantage – income tax, while the vehicle is taxed with its total costs. For this reason, the distinction between professional and private trips is mandatory. The logbook is maintained by the entry of the date and the departure and arrival times, the places of departure and arrival, the mileage, the purpose of the trip and the interviewed parties on business trips. This must be complete and accurate. It is easier than expected when the logbook is stored in the vehicle and the driver simply makes the appropriate entries on departure and arrival. Furthermore, a logbook must have no gaps. The pages of the standard logbooks that exist in the stationery shop are numbered and must remain so. The tax office otherwise does not recognize the entire logbook. Corresponding cases repeatedly came to court, the BFH (Federal Finance Court) finally gave the German tax authorities right.
Other reasons for a logbook
Employees can also use the travel book to claim catering allowances. The journeys between the apartment and the permanent workplace are especially tax-deductible. In addition, there are administrative and legal reasons for keeping a logbook. Fleet managers have driver’s logbooks kept in order to keep control, authorities can prescribe driving if, after a traffic violation, the holder, but not the driver of a car was to be determined (§ 31a StVZO). Such a logbook is available to all authorities in the Flensburg central register.
The electronic logbook
Logbooks have been offered in electronic form for quite some time now and are thus recognized by the tax office if they meet the relevant requirements. Here, too, a manipulation must be impossible. Running Excel spreadsheets or similar expressly does not meet these requirements, they should be manipulated. Several manufacturers now offer tax-proof electronic logbooks, which should be checked before purchasing this security – if necessary, by asking the tax adviser.
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