Ask a tax advisor on the topic of Income tax return

Deductible expenses for company car based on salary sacrifice

May 6, 2013 | 30,00 EUR | answered by Steuerberater Thomas Textoris

Dear tax advisor,

After not being able to find information online and from colleagues regarding the tax aspects of a company car as a layman, I would need a professional and reliable opinion after receiving the income tax assessment for 2012.

Situation:
My company provides me (IT consultant) with a company car based on a salary sacrifice. I cover all costs (leasing, fuel, insurance, etc.) through a gross salary sacrifice. The 1% rule is applied, the 0.03% does not apply as I am not in the employer's office for more than 42 days per year. The company car can also be used privately, but is used 90% for business trips to clients. A mileage log is kept. The daily place of work is approximately 100 km away from my residence. The employer's headquarters is roughly halfway, but not visited (not sure if this is relevant, but wanted to mention it).

Income tax calculation:
I used WISO to prepare the income tax return for 2012. I claimed the round trip mileage to the customer at 0.30 € per km as business expenses and attached a confirmation from the employer: "We hereby confirm that the company vehicle with license plate A-BC 1234 was provided based on salary sacrifice and not as an additional benefit. The vehicle may also be used for private purposes."

Income tax assessment:
"The travel expenses for the company car were not considered, as you incur no expenses."

In addition to the general question of whether an appeal is worthwhile, I would like to know how to correctly account for the company car:

1. Was my mileage calculation as mentioned above correct? I suspect not (mileage log not submitted yet, as "fast entry")
2. Since I practically spend every working day at the same client location, does this count as a "permanent place of work" and therefore, would the commuter allowance (despite the company car) be correct?
3. Have the actual costs confirmed by the employer and then claim them as business expenses, regardless of actual business mileage? If so, what exactly do I need from the employer for this?
4. Bill the business miles driven (mileage log) and offset them against the 1% taxation afterward, this seems the most complicated to me, as per telephone information from the tax office employee, the driven miles and actual costs must be calculated against the mileage.

Regardless of the correct approach, I would appreciate a recommendation on whether I can take the necessary steps afterwards through WISO or should arrange a personal appointment with a tax advisor or tax assistance.

Thank you in advance and best regards.

Steuerberater Thomas Textoris

Dear inquirer,

As part of an initial consultation and considering the regulations of this forum regarding your fee, I would like to answer your question as follows:
The private usage portion has been determined through the 1% rule in your case. This so-called pecuniary benefit has been added to your salary, and accordingly, income tax, solidarity surcharge, and possibly social security contributions have been deducted from it. The private use of the vehicle is covered by the 1% rule. The actual private or business use of the vehicle is then irrelevant. A logbook is not necessary when using this method.

If the private usage portion is taken into account in the gross salary and subjected to income tax, a deduction as business expenses is possible in your income tax return! However, according to your information, you have waived a part of your cash salary. This can be beneficial if the income tax calculated based on the list price regulation is lower than the tax previously due on the salary.

However, according to § 9 para. 1 sentences 1 and 2 EStG, only expenses for the acquisition, security, and preservation of income are recognized as business expenses. No expenses and therefore no business expenses are incurred if income is foregone by waiving it (cf. BFH judgment of 21.10.1980).

The opinion of the tax office is thus correct. An objection would likely be rejected as inadmissible.

In your income tax return, you can also choose the logbook method. For this, your gross salary according to the wage tax certificate would need to be reduced by the pauschally determined private usage portion and increased by the actual private usage portion according to the logbook. A ratio is to be formed for the determination according to the logbook:

Private trips / trips home to the workplace to other trips * total costs.

The total costs incurred by your employer for the vehicle (depreciation, leasing costs, insurance) are decisive. Costs borne by yourself (e.g. fuel) are additionally deductible as business expenses (cf. BFH).

It should be noted that logbooks are very closely scrutinized by the tax authorities and are often rejected due to lack of proper documentation.

The private use of the vehicle covers a very comprehensive spectrum. I hope to have answered your question sufficiently within the scope of an initial consultation.

Sincerely,

Thomas Textoris
Tax advisor