double household management and family visits
May 17, 2009 | 80,00 EUR | answered by Ginster Frank
My employer has provided me with a company vehicle for business and private use. The employer has leased the vehicle.
I have my primary residence 270 km away from my workplace, and therefore have a tax-recognized secondary residence.
I make a weekly trip to my family home.
The distance between my secondary residence and workplace is 2 km (3 times a week, as I work from home two days).
Annual mileage breakdown:
Total mileage: 35,000 km
including:
weekly trips to family home: 25,000 km
trips from residence to workplace: 500 km
remaining private trips: 9,500 km
In this case, would it be worth switching from the 1% taxation to a mileage log?
Dear Madam,
Dear Sir,
In response to your inquiry, we would like to inform you briefly of the following:
According to the decision of the Federal Fiscal Court (BFH) dated April 4, 2008 (file no. VI R 85/04), the 0.03 percent surcharge according to § 8 para. 2 sentence 3 Income Tax Act (EStG) is only to be applied if the employee has actually used the company car for trips between their place of residence and their workplace.
The BFH does not agree with the interpretation advocated by the tax authorities. According to the purpose of § 8 para. 2 sentence 3 EStG, the surcharge is a correction item for the - lump sum - deduction of work-related expenses according to § 9 para. 1 sentence 3 no. 4 EStG, which must also be taken into account even if the company car is provided free of charge for trips between home and work.
Therefore, the calculation of the surcharge must be based on the actual use of the company car for trips between home and work, just like the lump sum deduction of work-related expenses.
The presumption, which exists under § 8 para. 2 sentence 2 EStG for the private use of the company car, does suggest that the company car is actually used for trips between home and work. However, this presumption can be refuted by presenting substantiated objections indicating the serious possibility of an atypical sequence of events. Since in this case the company car was actually only used once a week for trips to the employer's place of business, instead of the lump sum monthly surcharge provided for in § 8 para. 2 sentence 3 EStG, an individual evaluation of the trips should be made at 0.002% of the list price per kilometer traveled. This corresponds to the regulation of § 8 para. 2 sentence 5 EStG for the valuation of the use of the company car for trips home within the context of a dual household.
However, the tax office will not agree to the requested reduction of the taxable benefit due to the limited private use of the car for trips between home and work, as the BFH ruling of April 4, 2008 is accompanied by a non-application decree and therefore cannot be applied by the tax office in similar cases. The BFH focuses on the extent of the actual use of a company car and, in the view of the tax authorities, contradicts the wording and purpose of the law, as there are only two methods for determining the taxable benefit from the use of a company car for trips between home and work:
a) the lump sum valuation method (0.03% rule)
b) the individual valuation method (mileage log method).
The extent of the actual use of the company car for trips between home and work is irrelevant for the application of the 0.03% rule.
According to the wording of the law ("may be used") and the purpose of the law, it is solely important whether the employee has the objective possibility to use the company car for trips between home and work. Only in further model proceedings can the BFH take a position on the non-application decree of the tax authorities.
In a similar manner, the Hessen Fiscal Court also ruled in its judgment of March 16, 2009, file no. 11 K 3700/05, that a lump sum should not be applied for infrequent trips between home and work.
If an employee resides in a company apartment where office spaces used by them are also located, and they drive from there to their employer's place of business with their company car, these are considered trips between home and work, not between two workplaces. The taxable benefit for the use of the company car must, depending on the individual case, not necessarily always be calculated according to the statutory lump sum regulation, but can be determined by an individual evaluation of the actual trips taken if the car is only used occasionally.
Therefore, according to the tax authorities, the calculation would be as follows:
1% of the list price
+ 0.03% of the list price
Total x 2 km
+ 0.002% of the list price for the actual trips between home and work
= Non-cash benefit
Unfortunately, based on your information, it is not possible to determine whether it would be beneficial to keep a mileage log. Actual expenses related to the vehicle and the list price of the vehicle are needed for such an evaluation.
However, based on the description of the situation, it may be more advantageous to keep a mileage log.
If you have any further questions, please contact our office at 02232/9345-0.
Best regards,
FRANK GINSTER & Partner
Tax consultancy firm
Frank Ginster
Dipl. Financial Economist
Tax advisor
