Buying or leasing a company car - here is a short decision guide First of all, you should make yourself clear what the tax side of purchasing and leasing looks like:
When purchasing a company car (financed by credit), you can deduct the following items as business expenses:
The purchase price - but not immediately in the year of purchase, but spread over 6 years of useful life (according to the depreciation table). Example: If you buy a car in June for 19,000 €, you can claim 3,000 € each as operating expenses for linear depreciation from year 1 to year 5 inclusive.
The interest, if you financed the purchase price by credit. (You cannot claim the repayment instalments as tax-deductible).
The current operating costs. (petrol, repairs etc.)
If you are leasing a company car, you can claim these items:
The special lease payment, which you pay at the start of the lease, if applicable. You can claim this special payment in full immediately - without the depreciation over several years.
- The current monthly leasing instalments.
- The current operating costs. (petrol, repairs etc.)
Tax advantage through immediately deductible special leasing payment for company cars
Tip: The immediately deductible special leasing payment can be the decisive tax advantage that can make leasing more interesting in individual cases.
At the end of the year, you are looking for a way to quickly squeeze the profit so that the tax at the end of the year is not so high. You also need a new company car.
So your solution is: You lease a new car and agree on the highest possible special leasing payment of up to 30%.
Because special payments of up to 30 % can be immediately deducted as operating expenses in your income surplus calculation (BFH, 5.5.1994, ref. VI R 100/93). So you quickly conclude a leasing contract in December 2020 for a €30,000 new car and pay a 30% special payment upon startup.
Result: € 9,000 immediate operating expenses.
For comparison: If you bought the car in December, you could (with linear depreciation) claim only one-twelfth of the annual depreciation: 30,000 € ÷ 6 years ÷ 12 months = 416 €. In this case, therefore, the leasing payment brings great advantages. When the tax office does not regard you as the lessee, but as the owner of the company car
But be careful: There is a danger in this tax-saving idea if you do not pay close attention to the contract details: The tax office classifies you as the lessee as the actual owner of the vehicle. Then you risk the leasing contract being treated like an instalment purchase for tax purposes.
The consequence: You have to depreciate the leased asset and divide the leasing instalments and special payments into interest and repayment. Only the interest portion can then be deducted as business expenses. And that can be expensive. The following constellation is particularly critical: If the basic rental period is less than 40 % or more than 90 % of the usual useful life, you as the lessee will be allocated the leased asset as your property from the outset.
So please pay attention to these limits when drafting a leasing contract!