Ask a tax advisor on the topic of Profit and loss statement

Private use of company car by self-employed individuals

February 6, 2019 | 40,00 EUR | answered by Steuerberater Knut Christiansen

Hello

I am self-employed and would like to use my private car (P1) as a company car now, as there will be some future assignments that require longer trips.
I want to settle everything with a mileage log.
The current car (P1) is already quite old (more than 12 years).
I would like to use this one for now and then buy a newer "used" car (P2) during the year to use as a company car.

For the current car (P1), I would prefer to only deduct the costs and not depreciate it, as I cannot estimate how much it is still worth.
For the next one (P2), I would deduct the costs and definitely also depreciate it, as P2 would be fully depreciated after 2 years due to its age.

The current car (P1) is then to be sold privately.
Since it is a rare model, I could potentially get a collector's price of more than €10,000.
It is also possible that it will only be €3,000.

Would I have to report the sales proceeds as profit because I used the car (P1) as a company car for a short time?
And how would the use of the two cars be counted, for example if a lot of kilometers were driven for business with P1 and then only a few with P2?

The car (P2) may only be used for business purposes by 30%.
Would it even make sense to declare the car as a company car, as 70% of the costs would have to be recorded as profit?
Or does the depreciation not count towards the private portion of the company car, and only the ongoing costs are split 30/70?

And where exactly do I have to include this private portion in the profit and loss statement?
Best regards
Peter Kluge

Steuerberater Knut Christiansen

Good evening and thank you for your inquiry.

Basically, you would need to include the vehicle P1 at its fair market value in the business assets if the business use is over 50%. If the use is below that, you can still include the vehicle (with a minimum usage of 10%). This means that you would have to estimate the value at which you include it, possibly supported by an appraisal. You could then depreciate this value. If the vehicle is sold, any potential gain (sale price - book value) would be subject to taxation. Therefore, it would be worth considering whether it would be better to not record the business trips and treat them as an expense at a flat rate of 0.30 EUR per kilometer.

The personal use would be determined by a logbook if the vehicle is included in the business assets. The claimed depreciation would also be taken into account (which you would also have as a business expense).

If you use P2 for business purposes only 30% of the time, you can still deduct 30% of the costs including depreciation for tax purposes. It would be worth comparing whether it might be more beneficial to value the business kilometers at 0.30 EUR as mentioned above and record them as an expense. But again, if you include the vehicle in the business assets, you would have to claim the depreciation.

I hope this answers your question. Feel free to ask any further questions.

Best regards,

Knut Christiansen
Tax advisor

You can enter the private use of the vehicle in line 19 of the EÜR attachment.