Including the service car in the tax return

A lot of employees look forward to their employer providing them with a fancy service car. The joy is even greater if they are not only allowed to use the car for business but also privately.

The rude awakening often comes during the subsequent tax return since the service car has to be taken into account. There are a number of scenarios in which you can correctly indicate your company car in the tax return.

Is the company car only used for business trips? – Little work and no commuter allowance

Should your employer, which is rather unusual, provide you with a service car only for business trips (including the trips from your home to the workplace), then there is not much to consider in the tax return. Unfortunately, you will not be allowed to take advantage of the commuter allowance in Appendix N of the standard form, since your employer already bears the cost of your commute in the form of the service car.

Private use of the company car must be taxed!

The situation is different in the tax declaration if you are allowed to also use the company car for private trips. This is considered as a so-called "financial advantage" which your employer grants you and of course this must be taxed. There are different possibilities to do this.

The first possibility to indicate a privately used service car in the tax return is the 1 percent rule. In this case, you tax one percent of the list price of your service vehicle per month. You must also pay 0.03 percent of this amount for each mileage traveled between your apartment and the workplace.

What is much more elaborate is the keeping of a driving logbook in which you have to record all the journeys with your company car such that you can precisely differentiate between private and company trips. You have to be extremely precise in this case, because if you make mistakes, it would often give reason for the tax office to demand hefty tax payments. By the way, the use of an electronic tachograph is not allowed!

You must enter the company car in the following position in the tax declaration

You must enter the financial advantage of the company car in the tax declaration on Appendix N in the field "Taxable labor wage from which no VAT deduction has been made (if not included in the Payroll tax certificate)". Tax consultants or an income tax assistance union can help you via a hotline with the exact and correct calculations.