How is a company car treated for tax purposes in payroll accounting?
October 10, 2022 | 40,00 EUR | answered by Claudia Köhler
Dear tax advisor,
I am Thomas Dörr and work as an employee in a company that provides me with a company car. In the past, I have never delved deeply into the tax treatment of this benefit, but now I am unsure how to correctly report the company car in my payroll.
Currently, the company car is available to me for both business and personal purposes. I am aware that this generates a taxable benefit. My concern now is that I may make errors in my payroll and end up paying unnecessarily high taxes.
My question to you as a tax advisor is: How is a company car treated tax-wise in payroll? Are there specific regulations I need to follow? What options do I have to minimize the taxable benefit? Are there specific documents I need to provide to take advantage of potential tax benefits?
I greatly appreciate your assistance and thank you in advance for your help.
Best regards,
Thomas Dörr
Dear Mr. Dörr,
Thank you for your inquiry regarding the tax treatment of a company car in your payroll. It is understandable that you are concerned about possible tax implications and want to make sure you are doing everything correctly.
A company car that is available to you for both business and personal use results in a taxable benefit that must be included in your payroll. This taxable benefit is usually calculated using the so-called 1% rule. This means that 1% of the domestic gross list price of the vehicle is considered as a taxable benefit per month and added to your taxable income.
However, there is also the option to determine the taxable benefit using a mileage logbook. In this case, you must keep detailed records of both business and personal trips to determine the proportion of personal use of the company car. This method can sometimes result in a lower tax burden if the personal use is minimal.
To minimize the taxable benefit, you could, for example, ensure that the gross list price of the company car is low or that it is an efficient vehicle. Reducing the personal use of the vehicle can also help reduce the tax burden.
In general, you do not need to provide specific documentation in your payroll, as the taxable benefit is calculated based on legal regulations using the gross list price or a mileage logbook. However, it is important that the information provided is accurate and complete in order to take advantage of possible tax benefits and avoid errors.
I hope this information has been helpful to you. If you have any further questions, please feel free to contact me. Thank you for your trust, and I wish you all the best for your payroll.
Best regards,
Claudia Köhler
