Company car 1% also applies to trade tax.
September 7, 2012 | 25,00 EUR | answered by Michael Herrmann
Hello,
I am a sole proprietor and I have a company car, for which I tax the monetary benefit with the 1% rule.
My tax advisor includes the 1% in the income statement as follows:
Gross profit
Other expenses
Use of items outside the business 19% (car use) [1% here]
Use of items outside the business
(car use) without VAT. [commuting route]
Operational gross profit
Upon inquiry, he explained to me that he includes the car in the calculation of trade tax.
Is that correct?
Since my city has a tax rate of 475%, this makes a significant difference.
Dear inquirer,
First of all, thank you very much for your inquiry, which I would be happy to answer based on the information provided and in the context of your commitment to an initial consultation. The response is given in accordance with the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The 1% rule is the basis for determining taxable profits for income taxes. This includes income tax and trade tax. Even if the profit is still modified for trade tax purposes, the income from the 1% rule is fully included in the trade tax profit.
However, your tax burden does not increase due to trade tax on private vehicle use. The overall burden is lower because the trade tax paid is credited against the income tax to largely avoid double taxation. A rough estimate suggests that the trade tax burden can be reduced by up to 80% through this credit. However, this requires a high income tax rate, which depends on the income.
I hope that these details have given you a sufficient overview of the situation in the context of your commitment and this initial consultation.
Best regards,
Michael Herrmann
Graduate Financial Economist (FH)
Tax advisor
