How does the tax treatment of company cars work in the income tax return?
November 23, 2023 | 40,00 EUR | answered by Eiko Hoffmann
Dear tax advisor,
My name is Anna Hofstetter and I have been working for a company for several years that provides me with a company car. So far, I have used the car for both business and personal purposes. Now I am faced with the question of how to correctly report the tax treatment of the company car in my income tax return.
First of all, I am unsure about how to calculate the taxable benefit that I receive from the private use of the company car. I have heard that different methods such as the 1% rule or the mileage log can be applied for this. Which option is most advantageous for me in my situation and how do I implement it in the income tax return?
Furthermore, I am wondering if I can deduct fuel costs, repairs, and other expenses for the company car for tax purposes. How exactly does the deductibility of these costs work and what receipts do I need to keep for this?
I also would like to know if I can deduct the company car for tax purposes even if I only use it for business purposes and do not derive any taxable benefit from personal use. How does the use of the company car affect my tax burden and how can I possibly optimize it?
I would greatly appreciate it if you could assist me with these questions and provide possible solutions for correctly and efficiently implementing the tax treatment of my company car in the income tax return.
Thank you in advance for your support.
Sincerely,
Anna Hofstetter
Dear Mrs. Hofstetter,
Thank you for your inquiry regarding the tax treatment of your company car in your income tax return. I understand that this can be a complex issue, so I will try to answer your questions as comprehensively as possible.
Firstly, regarding the calculation of the taxable benefit of the private use of your company car. There are generally two common methods for this: the 1% rule and the logbook method. With the 1% rule, 1% of the gross list price of the car is taxed as a taxable benefit each month. This method is especially suitable if you use your company car predominantly for private purposes. With the logbook method, on the other hand, you must document every business and private trip. Only the actual costs for private use are taxed. In your case, as you use the car for both business and private purposes, the logbook method may be more advantageous as you can prove the actual costs.
Regarding the deductibility of fuel costs, repairs, and other expenses for the company car, the following applies: Generally, these costs can be tax deductible if they are work-related. It is important to keep receipts such as fuel receipts, repair invoices, etc. carefully and to include them in your tax return. However, please note that only work-related costs are deductible.
If you use your company car exclusively for business purposes and do not derive any taxable benefit from private use, you can still deduct the car for tax purposes. In this case, the company car is treated as a business expense and therefore reduces your profit or taxable income. This can reduce your tax burden and be tax advantageous.
In summary, the tax treatment of a company car in the income tax return depends on various factors. It is important to choose the most advantageous method for calculating the taxable benefit and to carefully document all relevant costs. If you are unsure or if the situation is complex, I recommend seeking advice from a tax advisor who can advise you individually.
I hope that I could help you with this information and am available for any further questions.
Best regards,
Eiko Hoffmann
