A company car is an attractive benefit but also comes with tax obligations. If you use the car for private purposes, you must pay income tax. Here’s how taxation works and the relevant regulations.
- ou usually don’t need to declare your company car separately in your tax return, as taxation is handled through payroll.
- Tax is calculated using either the 1% rule or a logbook.
- If you commute to work fewer than 15 days per month, the 0.002% rule may be more cost-effective.
- Keeping a logbook can be beneficial if you drive frequently for business or have low overall car costs.
- If you use the vehicle exclusively for business purposes, no tax is applied.
🚀 Your Guide
- Do I need to declare my company car in my tax return?
- How is income tax calculated for a company car?
- The 1% rule: Flat-rate taxation
- 0.03% vs. 0.002% rule for commuting
- Switching from the 0.03% rule to the 0.002% rule
- Calculating income tax with a logbook
- Fully business use: Tax-free option
Do I Need to Declare My Company Car in My Tax Return?
In most cases, you don’t need to declare your company car separately in your tax return.
Company car taxation is already handled through monthly payroll deductions, so entering it in the Taxfix app is unnecessary.
However, when specifying your commuting or business trips, select "Car" as your means of transport:
- Commuting expenses to your primary workplace can still be deducted, even if you use a company car.
- Business trips using a company car cannot be deducted. In this case, select "No, no travel expenses" when asked about your means of transport.
How Is Income Tax Calculated for a Company Car?
If you are allowed to use your company car privately, it is considered a taxable benefit. This means it is treated as part of your salary and must be taxed accordingly.
There are two ways to calculate the taxable benefit:
- Flat-rate taxation (1% rule)
- Logbook method
Once you choose a method, you must stick with it for the entire year. If you realize your chosen method is too expensive, you can switch at the beginning of the following year.
👉 Learn more about how company cars are taxed in our video (the video is in german, please use the subtitle):
The 1% Rule: Flat-Rate Taxation
With the 1% rule, a fixed amount is taxed monthly for private use:
1% of the car’s original list price + 0.03% per kilometer for commuting to work
This amount is added to your monthly gross salary, increasing your taxable income and reducing your net salary.
Example:
The gross list price of your company car is 35,000 euros. The distance to your workplace is 20 km. Your monthly salary is 3,000 euros.
📌 Calculation:
- 1% of €35,000 = €350
- 0.03% of €35,000 × 20 km = €210
- Total taxable amount: €560
Your taxable income for that month increases from €3,000 to €3,560. This adjustment is automatically made in your payroll.
The 1% rule applies regardless of how much you actually use the car privately—you pay the same tax whether you drive privately 20% or 80% of the time.
0.03% vs. 0.002% Rule for Commuting
Taxation of commuting costs can be calculated either as a flat rate (0.03%) or per actual trip (0.002%).
The default method assumes 15 commuting days per month:
📌 0.03% of €35,000 × 20 km = €210 taxable per month
If you commute fewer than 15 days per month, the 0.002% rule might save you money:
📌 0.002% of €35,000 × 20 km × 5 trips = €70 taxable per month
In this case, you only pay tax on €70 instead of €210.
Switching from the 0.03% Rule to the 0.002% Rule
If you commute less frequently (e.g., due to remote work), switching to the 0.002% rule may be beneficial.
This requires:
- A written request to the tax office
- A detailed log of your actual commuting days
After submitting your tax return, inform the tax office in writing and include your log of commuting days for verification.
Calculating Income Tax with a Logbook
A logbook records all private and business trips. Though time-consuming, it can be more tax-efficient in these cases:
👉 You frequently drive for business
👉 Your company car has low overall costs
👉 Your car is already depreciated or a used vehicle
👉 You pay for fuel yourself
👉 You contributed to the car’s purchase
The tax office does not accept spreadsheets (e.g., Excel) or loose paper logs. Instead, certified logbook software or a bound logbook is required.
Fully Business Use: Tax-Free Option
If your contract states that the car is for business use only, no tax applies. The tax office cannot assume private use in this case. If you do use the car privately despite the restriction, you must prove that it was used exclusively for business purposes.
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