SteuerGo FAQs

(2023) Private use of company car: (1) Flat-rate method for business use

The so-called 1% flat-rate method has only been permitted since 2006 for vehicles that are part of the necessary business assets, i.e., those used for more than 50% business purposes. The private usage value can be determined on a flat-rate basis without much effort, using only the list price of the vehicle as a basis. Your individual situation is not taken into account, which is why this method can sometimes be more favourable and sometimes less advantageous than the logbook method.

Private usage value = list price x 1% x number of months

The domestic list price for the company car, including special equipment and VAT, is 30.000 Euro.

The private usage value is: 1% of 30.000 Euro x 12 months = 3.600 Euro per year.

According to the new legal situation, accident costs incurred during a private trip are no longer covered by the flat-rate usage value. Rather, the employer's waiver of cost reimbursement constitutes an additional monetary benefit for you (BFH ruling of 24.5.2007, BStBl. 2007 II p. 766).

VAT: The private usage value determined using the flat-rate method is subject to VAT (§ 3 para. 9a no. 1 UStG). However, not all costs are subject to input tax, e.g., vehicle tax and vehicle insurance, so the usage value can be reduced by 20% on a flat-rate basis, and VAT can be calculated on the reduced amount. The VAT amount must be entered in the line "Collected VAT and VAT on free value transfers".

The private usage value according to the flat-rate method is: 30.000 Euro x 1% x 12 months = deduction for costs without input tax deduction flat rate 20%	3.600 Euro ./. 720 Euro	3.600 Euro
Basis for VAT: 19% on the basis	= 2.880 Euro 547 Euro	+ 547 Euro
To be taxed as business income		= 4.147 Euro

Please note that there are special regulations for electric vehicles.

a) General regulation for electric vehicles and hybrid electric vehicles

• For private journeys, depending on the type of vehicle (pure electric vehicle or externally chargeable hybrid electric vehicle) and the list price, 1.0 percent of half or a quarter of the list price is applied monthly as the private usage value. This applies to the purchase or leasing of an electric or hybrid electric vehicle between 1.1.2019 and 31.12.2030 (see below under 1b. and 1c.)
• For purchases or leases before 1.1.2019, 1.0 percent of the full list price is applied monthly; however, a reduction by a flat-rate deduction (compensation for disadvantages) is made. In addition to pure electric vehicles, externally chargeable hybrid electric vehicles are also eligible (see below under 1d.)
• The flat-rate deduction or compensation for disadvantages also applies to externally chargeable hybrid electric vehicles purchased or leased between 2020 and 2022 that do not meet the requirements for the reduced list price (see below under 1d.)
• For journeys between home and work, a surcharge is added: Normally, 0.03% of the halved or quartered list price per kilometre or - only for employees - for less than 15 journeys per month by individual assessment of the actual journeys with 0.002% of the halved or quartered list price per kilometre. This applies to the purchase or leasing of an electric or hybrid electric vehicle between 1.1.2019 and 31.12.2030. For purchases or leases of an electric or hybrid electric vehicle before 1.1.2019 or if the required standards are not met, the surcharge is calculated from the full list price; however, a reduction by a flat-rate deduction is made.

The basis for calculating the usage value or withdrawal value is the domestic list price at the time of the vehicle's first registration plus the costs for special equipment including VAT. The list price is the manufacturer's recommended retail price for the vehicle on the German market. The list price is rounded down to the nearest 100 EUR. However, this rounding is only done after the flat-rate deduction has been made.

b) Concession for pure electric vehicles until 2030

Emissions-free electric vehicles are to be given special concessions in company car taxation: For them, the percentage for the taxable private share is reduced from 0.5 percent to 0.25 percent. Technically, the measure is implemented by quartering the assessment basis. In the 1% flat-rate method, only a quarter of the list price is applied. This means specifically:

For pure electric company cars purchased between 1.1.2019 and 31.12.2030, if the vehicle has no carbon dioxide emissions per kilometre driven and the gross list price of the vehicle does not exceed 60.000 Euro, only a quarter of the list price is applied (§ 6 para. 1 no. 4 sentence 2 no. 3 and sentence 3 no. 3 EStG, inserted by the "Act on Further Tax Promotion of Electromobility and Amendment of Other Tax Regulations" of 12.12.2019; supplemented by the Second Corona Tax Assistance Act).

Initially, the limit for the gross list price was 40.000 Euro. This limit was then raised to 60.000 Euro with the Second Corona Tax Assistance Act. The new limit applies retroactively from 1.1.2020 for vehicles purchased, leased, or first made available for private use from 1.1.2019 (§ 52 para. 12 sentence 2 EStG).

If the list price of a pure electric vehicle exceeds 60.000 Euro, it is halved for the taxation of private use. It can be assumed that the legislator had the expensive Tesla models in mind with this limit, which they did not want to promote additionally. Here, the half assessment basis remains.

c) Gradual reduction of benefits for hybrid electric vehicles

For externally chargeable hybrid electric vehicles, as mentioned, the halved assessment basis generally applies for the taxation of private use. However, there is a gradual reduction of tax benefits or, in other words, a tightening of the conditions for tax advantages. Specifically, the following applies: 

• For purchases between 1.1.2019 and 31.12.2021, the half assessment basis applies if the carbon dioxide emissions are a maximum of 50 grams per kilometre or the electric range is at least 40 kilometres ("Act to Prevent VAT Losses in Online Trading and to Amend Other Tax Regulations" of 11.12.2018). These are the current requirements under § 3 para. 2 no. 1 or no. 2 of the Electromobility Act.
• For purchases between 1.1.2022 and 31.12.2024, the half assessment basis applies if the carbon dioxide emissions are a maximum of 50 grams per kilometre or the electric range is at least 60 kilometres ("Act on Further Tax Promotion of Electromobility and Amendment of Other Tax Regulations" of 12.12.2019).
• For purchases between 1.1.2025 and 31.12.2030, the half assessment basis applies if the carbon dioxide emissions are a maximum of 50 grams per kilometre or the electric range is at least 80 kilometres.

For vehicles that do not meet these requirements but have a higher gross list price than vehicles with a combustion engine, the previous regulation (compensation for disadvantages by reducing the gross list price by flat-rate amounts for the battery system) continues until 2022. This means: For purchases in 2019, the list price or acquisition costs are reduced by 200 Euro per kWh battery capacity, up to a maximum of 7.000 Euro. For purchases in 2022, the list price or acquisition costs are reduced by 50 Euro per kWh battery capacity, up to a maximum of 5.500 Euro.

d) Compensation for disadvantages in old cases and for vehicles that do not meet the requirements

For purchases or leases of an electric vehicle or hybrid electric vehicle before 1.1.2019 and for externally chargeable hybrid electric vehicles that do not meet the requirements mentioned under point 1c, there is a complicated calculation to determine the list price relevant for the one-percent rule: The (full) list price is reduced by a flat-rate deduction, limited to a maximum deduction amount, due to the costs for the battery system included in it (§ 6 para. 1 no. 4 sentence 2 EStG in conjunction with § 8 para. 2 sentence 2 EStG).

The reduction and maximum amount depend on the year of purchase of the vehicle. You can find the kWh value of the vehicle in the registration certificate in field 22.

For purchases up to 31.12.2013, 500 Euro per kWh of battery capacity, max. 10.000 Euro, is deducted from the list price. These amounts decrease by 50 Euro per kWh or 500 Euro per year for purchases in subsequent years. The tax promotion applies to vehicles purchased by 31.12.2022 (§ 52 para. 16 sentence 11 EStG).

Important: The concession applies only to income tax, not to VAT.