Private sale of company car
August 18, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Good day. As a freelancer, I purchased a used car as a company car in November 2009, which I deduct 80 percent of the costs for tax purposes. Since I hardly use the car anymore and to reduce my ongoing expenses, I am considering downsizing. Question: How can this be optimally structured for tax purposes? I have read that in the case of a sale, value added tax is due, and I would have to pay tax on the selling price accordingly, which would make the whole endeavor rather nonsensical. How would a solution involving a prior private withdrawal look like? In terms of facts: The new car price was around 22,000 euros; I paid 15,320 euros for the used car and claimed back 2,446 euros in input tax.
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your situation in a first consultation as follows:
From your description, I understand that the vehicle is considered necessary business assets, as it is used for 80% for professional purposes.
Since you are entitled to input tax deduction, the sale of the vehicle is subject to VAT.
Assuming you sell the car for €10,000 gross, you will have to pay €1,596.64 VAT to the tax office from the sales price. You must pay VAT even if the vehicle is transferred to private assets.
For income tax purposes, the following applies:
You must pay tax on the difference between the book value of the vehicle and the net selling price (selling price without VAT). If the net selling price is higher than the book value, then there is a book gain; in the opposite case, there is a book loss, which has a tax-reducing effect.
The book value at the time of exit is determined by the net acquisition costs paid by you (without VAT), which are to be reduced by the depreciations since November 2009 until the sale, for example in 2011. The balance is the book value.
In the case of a private withdrawal followed by a sale in private assets, the amount of the private withdrawal would be based on the selling price.
I regret not being able to provide a more positive answer, but I hope I have been able to help you.
Sincerely,
Ulrich Stiller
Tax consultant/Diploma in Business Administration
