Deduct car leasing
November 28, 2020 | 29,00 EUR | answered by Steuerberater Knut Christiansen
Hello,
I am currently a freelancer (artist/music teacher registered with the Ksk) exempt from sales tax.
To change my very uncertain situation (due to Covid19), I have decided to apply for a permanent position, which I have actually been offered. I will likely have to reduce my artistic activities in the future, but continue them (after Covid19).
My new position (starting on January 1, 2021) is "Deputy Music School Director", with a compensation of TvöD 10. As the music school is decentralized, I will need a car. I do not currently own one. The job listing stated: Private health insurance necessary.
I would like to lease a car (starting from €79/month) to save capital and take advantage of tax benefits.
My question is: Will I be able to deduct the leasing payments and insurance as an employee, or should I register the car with my tax number as a freelancer in order to deduct the payments? How should I best acquire the car in order to maximize tax benefits? What options are available?
In the leasing portals, you always have to choose between private or commercial. Would it make sense to establish a side business (e.g. a small trading company)?
Thank you.
Good day and thank you for using frag-einen.com!
In principle, there would be the possibility to acquire or deduct the car through freelance work if its use for freelance work is at least 10% per year. In that case, you could deduct all costs related to the vehicle as operating expenses. However, you would have to record fictitious income for the private use (including trips to the music school, more details on that later). Since you seem to use the vehicle very little or not at all for freelance work, the private portion would be very high. Therefore, in my opinion, it would not be worth leasing the vehicle for this purpose.
You can deduct the car or trips to the music school at 0.30 EUR/km (standard mileage rate) as part of your employment. All costs are included in the 0.30 EUR/km. From the 21st km (one-way distance to work), in 2021 you could then deduct 0.35 EUR/km.
Registering a commercial activity "just for the car" is also not recommended, as you would need to prove a taxable activity here as well. Otherwise, the tax office would not acknowledge the costs for the car.
In my opinion, you should therefore acquire the vehicle as a private individual and then, if there are occasional trips for freelance work, deduct them as operating expenses at 0.30 EUR/driven km. You should keep a list of the business trips so you can present them to the tax office.
I hope this answers your question, otherwise feel free to ask a follow-up question.
Please note that this forum cannot replace personal advice, but rather provides an initial tax assessment.
Best regards,
Knut Christiansen
Tax advisor
