The home office as a place of work has become increasingly important in today’s working world. The use of company cars in the home office has also become commonplace for many company car drivers and companies. But what effects does the use of the company car in the home office have on taxation and what should be considered? In this blog article you will learn everything important about this topic.
Usual taxation of the company car
If the company car may also be used privately, the resulting non-cash benefit must be taxed by the employee. As a rule, the non-cash benefit of company cars is taxed according to the so-called 1% rule. In this case, 1% of the list price is recognized each month as imputed income and is subject to tax. In addition, a flat monthly rate of 0.03% of the list price per distance kilometer is recognized and taxed as a non-cash benefit for each trip between home and the first place of employment.
An employee is provided with a company car by his employer. The gross list price of the car is 40,000 euros. The employee uses the car for both business and private trips from his home. He must pay tax on the monetary benefit resulting from the use of the car.
In this case, the amount is calculated according to the 1% rule and amounts to 1% of the gross list price of the car per month:
- 1 % of 40.000 Euro = 400 Euro
If the employee drives the 40,000 euro company car 30 km to work, an additional 360 euros per month must be taxed:
- 0,03 % of 40.000 Euro= 12 Euro
- 30 kilometer x 12 euro = 360 euro
This results in a non-cash benefit totaling 760 euros, which must be added to the employee’s taxable income and taxed accordingly.
The 1% rule is particularly profitable for employees from a tax perspective if the company car is frequently used for private purposes. If the share of private use is low, it is more advisable to keep a logbook.
Taxing the company car in the home office
The following also applies to the use of the company car in the home office: If the vehicle is used for private purposes, the imputed income must be taxed. If a company car in the home office is not used privately by the employee, he or she does not have to pay tax on it.
If the employee has previously taxed the company car according to the 1% rule, nothing changes in the home office. Tax must also be paid on the 0.03% of the list price for each kilometer of distance between home and the first place of work. This is because the tax office makes a flat-rate assumption that employees commute at least 15 times a month with the company car between their place of residence and their first place of work.
Alternative for company cars: the 0.002% rule
If the employee drives the company car to the office less than 15 times a month, each trip can be taxed individually using the 0.002% rule. The special regulation applies, i.e. only if the company car is only used for journeys between the place of residence and the place of work on a maximum of 180 days per year. In this case, the 0.002% rule applies as a significantly more favorable determination method.
Calculation example 0.002% regulation vs. 0.03% regulation
In the previous example, based on the 0.03% rule, this resulted in a tax burden of 360 euros for the employee, which must be taxed:
- 40.000 Euro x 0,03 % x 30 Kilometer = 360 Euro
Assuming that the employee uses the company car (gross list price: 40,000 euros) only 10 days a month for trips to the office, the following calculation example results with the 0.002% rule:
- 40.000 Euro x 0,002 % x 30 kilometers x 10 days = 240 Euro
Instead of the tax burden of 360 euros per month, this results in 240 euros, a saving of 120 euros . If employees want to make use of this regulation, all office trips must be documented in writing to the tax office.
How to save taxes on a company car at the home office
To minimize the monetary benefit, employers and employees can follow a few tips:
- Agreement in the employment contract: If it is agreed in the employment contract that the employee may also perform his/her work in the office in his/her own home, this may be taken into account when calculating taxes.
- Use of the company car only for business trips: The less the company car is used for private purposes, the lower the additional tax burden. It is therefore advisable to use the company car only for business trips. For everything else, a private vehicle can be driven instead.
- Keeping a logbook: A driver’s logbook can help to document business and private trips accurately. In this way, the amount can be calculated accurately and the unnecessary payment of taxes can be avoided.
Frequently asked questions about the taxation of company cars in the home office
Does the vehicle need to be fully insured even when working from a home office?
Yes, the car must also be fully insured in the private office, since it is also used there. However, it is a good idea to check with the insurance company in advance to see if any special rules apply to the use.
Does taxation according to the 1% rule also apply to company cars that are used exclusively for work in the home office?
No, if the company car is used exclusively in the home office and no private trips are made with it, taxation according to the 1% rule does not apply. However, an accurate record must be kept by means of a logbook of the use of the company car in order to have proof in the event of a possible tax audit.
Can the imputed income be reduced by using an e-bike in the home office?
Yes, if an e-bike or bicycle is used for business travel instead of a company car, taxes can be reduced. This is because the private use of e-bikes and bicycles is tax-free.
Conclusion: Tax on company cars in the home office
The use of the company car at work in the home office has an impact on the taxation of the imputed income. But with some simple measures, such as keeping a logbook or creating a locked parking facility, the imputed income for taxes can be reduced. Alternatively, the use of an e-bike or bicycle for business trips can also reduce the taxation of the imputed income. A so-called mobility budget offers employees flexibility in their choice of means of transport. Find out what this means in our article“Mobility budget instead of company car: Good for employees and the environment“.