How can I account for company cars in the annual financial statements?
January 16, 2022 | 40,00 EUR | answered by Alice Heck
Dear Sir or Madam,
As the managing director of a small company, I am faced with the challenge of preparing the annual financial statements for the past fiscal year. I am unsure of how to include the company car in our financial statements.
Our company uses a company car for business purposes, both for client visits and internal meetings. The value of the company car is 30,000 euros and the annual operating costs amount to approximately 5,000 euros. The car is used 70% for business and 30% for personal purposes.
My concern is that I do not know exactly how to correctly include the costs and value of the company car in the financial statements. Should I record the costs as operating expenses and capitalize the value of the car? How does the personal use affect the tax treatment of the company car?
I would appreciate your expertise and support in correctly including the company car in the financial statements and maximizing any potential tax benefits.
Thank you in advance for your assistance.
Sincerely,
Laura Brandes
Dear Mrs. Brandes,
Thank you for your inquiry regarding the correct inclusion of the company car in the annual financial statements of your company. It is understandable that you feel uncertain, and it is important to clarify this matter correctly in order to fully utilize tax benefits.
First and foremost, it is important to know that the tax treatment of a company car depends on various factors. In your case, if the company car is used 70% for business and 30% for personal purposes, both the operating costs and the value of the car must be divided accordingly. The operating costs, such as fuel, insurance, and maintenance, incurred for business use can be recorded as operating expenses. It is important that the costs are divided according to the actual use of the car.
The value of the company car must also be taken into account in the annual financial statements. Typically, the value of the car is capitalized, meaning it is recognized as an asset in the balance sheet. This means that the value of the car is depreciated over its useful life. Depreciation is recorded as an expense and thus reduces the profit of your company.
The private use of the company car also has tax implications. For the private use of the company car, you must pay tax on a taxable benefit. This taxable benefit is calculated based on a predetermined percentage of the car's gross list price. It is important that you correctly calculate this and pay tax on the taxable benefit accordingly.
For the precise calculation of the depreciation of the company car and the taxable benefit for private use, I recommend consulting a tax advisor. They can help you correctly account for the company car in the annual financial statements and maximize tax benefits.
I hope this information is helpful to you and I am available to assist you with any further questions.
Best regards,
Alice Heck
Tax Advisor
