Some employers come up with the idea of getting their employees to do company advertising on their private cars. While some employers hope for a friendly service from their employees, other companies are willing to compensate their employees for it. In order for this obolus to be tax-free for employees, certain conditions must be met.
If no special contract is concluded with the employee for the rental of an advertising space on his private car, the tax office assumes that the employee’s advertising income is subordinate to his employment relationship. As a result, the employee must pay tax on this additional income as regular wages. Wage tax and social security contributions do not have to be paid on it, however, there is another possibility to do the same.
A separate contract is necessary
In order to decouple the income from the wages, a separate rental agreement should be drawn up that only covers the car advertising. The advertising benefit for the company must be explained in this case. In the case of certain regulations, such as parking the vehicle for advertising purposes, a minimum number of kilometers driven per year or the exclusion of other advertising partners for the car, this can usually be assumed. In addition, the advertising should be large and clearly visible. A tiny sticker with the company logo often does not look credible to the tax authorities. The contents of the contract should ideally be able to keep up with the usual conditions on the free advertising market.
The amount of rent makes all the difference
For the advertising measure, a monthly rental fee is usually agreed upon, which the boss transfers to the account of his employee. From a tax point of view, it is now no longer wages, but other income. Another prerequisite for tax exemption is the amount of the rental fee. Other income may remain tax-free up to a maximum amount of 256 euros per year. If the income exceeds this exempt amount, it is fully taxable. The recipient must pay tax on the excess amount. for this reason, employers like to set 21 euros a month as a rental fee. Thus, the total payments in a calendar year remain below the maximum limit. However, the tax exemption for car advertising only works if the employee does not receive any other income. Otherwise, the tax office will add them together, as a common maximum limit applies.
Legally compliant design of the advertising measure
The company should ensure that the rental fee for the car advertising is not excessive and can withstand market prices. Ideally, the company should also offer this type of advertising to people outside the company and not just to its employees. Then it is difficult for the tax office to find a target to attack. To be on the safe side as an employee, the contract and a photo of the car advertising should be kept as evidence when filing the income tax return.
Consultancy authority for wage tax assistance associations ends
From the VAT point of view, the rental contract represents a secondary entrepreneurial activity of the employee. As a result, the employee is no longer allowed to have the income tax return prepared by a wage tax assistance association due to the legal advisory authority according to the tax advisory law. this is true although the advertising income is exempt from income tax and no sales tax has to be paid due to the small business regulation.