Company Car Tax Benefit: Who Qualifies and What You Get
Learn how employees in Germany can use a company vehicle for private trips while receiving specific tax advantages.
If you use a vehicle provided by your employer for both business and private trips, you may be eligible for a specific tax arrangement.
Who it's for
This scheme is for employees who have been provided with a company car that they are permitted to use for personal, non-work-related travel.
What you get
You receive the benefit of using a company-owned vehicle for your private life. Instead of paying the full cost of a private car, your private use is handled through a simplified tax calculation.
What it costs you
This benefit is treated as a non-cash benefit, meaning it is added to your taxable income. You typically pay a monthly tax amount based on a percentage of the vehicle's list price.
The catch to know
The amount you are taxed depends on the type of vehicle you drive. While standard cars follow a set percentage, electric vehicles often qualify for a significantly reduced tax rate, making them much more cost-effective for the employee.
How to apply
- Confirm with your employer that your contract allows for private use of the vehicle.
- Check the list price of your vehicle to understand your specific monthly tax obligation.
- Ensure your employer includes this benefit correctly in your monthly payroll.
- Review your annual tax statement to ensure the non-cash benefit is accurately recorded.