Ask a tax advisor on the topic of Income tax return

Company car with full cost coverage by the employee.

March 12, 2014 | 25,00 EUR | answered by Peter Lipp

My employer offers the private use of a company car. The company car is financed by the employer through a full leasing rate. The rate consists (gross) of the pure financing (e.g. 700€) and a service fee (maintenance/insurance) ... totaling 200€ here. Therefore, the employer has costs of 900€ per month.

The ongoing expenses such as fuel/parking etc. are paid for separately.

The aforementioned 900€ are invoiced to me via salary conversion. Therefore, the employer has no actual costs. The cash benefit is determined using the 1% method. With a distance of 50km and a list price of 72,000 €, this results in a lump sum cash benefit of 1,800€ (720€ + 1080€).

What cash benefit arises in this case taking the "cap" into account?

In my understanding, the cash benefit is first reduced to the 900€ (= employer's costs). After deducting the employee contribution (900€) or taking into account the salary conversion, it should then result in no special tax burden. After all, the employer ultimately has no costs .... and thus I have no direct monetary benefit.

My (indirect) benefit is therefore solely the access to the large customer conditions (favorable leasing rate + service packages).

Unfortunately, I cannot find any information regarding the cash benefit for this "structure", since normally the employer covers the costs for the company car and does not fully (but possibly to a lesser extent) reimburse the employee....

The use of the large customer conditions is of course attractive .... but only if (significant) taxes do not apply.

Peter Lipp

Dear advice seeker,
the 1% rule only applies to the free provision of use. Since you cover all vehicle costs, I would recommend not applying this rule in your case.

If not all costs are passed on to you, it is considered a partially reimbursed use. In this case, the benefit in kind is set at 100% and the costs incurred are offset as deductible expenses.

I hope this answers your question sufficiently, but I am available for further inquiries.