What kind of vehicle is this 1

The 1 percent rule for company cars: when does it make sense?

1. Tax advantages of a company car

As a start-up, you probably use your car for both business and private purposes. It is important for the tax return whether the car is assigned to your business assets or your private assets, whereby an assignment to business assets is usually more favorable for tax purposes. The assignment is based on the following:

  • Less than 10% business trips: private vehicle - in this case, self-employed cannot sell this car for business purposes
  • more than 50% business trips: company car
  • more than 10% but less than 50% business trips: the decision is yours.

The 1 percent rule or the driver's log is not relevant for your private vehicle. However, if you use your private vehicle for business purposes, you can claim 30 cents per kilometer as business expenses.

The classification as a company car has several tax advantages in accounting. So you can write off the entire purchase price - usually over 6 years (more on the subject of depreciation and depreciation). You can also claim additional costs for your company car as business expenses during the financial year. These include, for example, the cost of taxes and insurance. You can also set trips between home and place of work (e.g. your company or a customer) at € 0.30 per kilometer. However: You have to pay tax on the use for private journeys.

2. Taxation of private company car use

Since you can deduct the cost of your company car from tax, you benefit from using your company car privately. This is a so-called pecuniary benefit. In order to be able to tax this monetary benefit, the tax office calculates a certain amount that is added to your profit in the financial year - as if you had additional income. This fictitious income is then taxed accordingly.

It concerns the much discussed § 6 Abs. 1 Nr. 4 EStG. The big question, of course, is: what is this fictitious revenue and how is it calculated? There are two ways to do this:

Taxation of the company car: logbook or 1 percent rule? Do the math yourself.

To the company car calculator

3. The 1 percent rule for company cars

The 1 percent rule is definitely the more convenient alternative for the self-employed. You hardly need to worry about anything, as your monetary benefit is calculated at a flat rate. And in this way:

  • The decisive factor is the gross list price of your vehicle at the time of first registration. If you have also treated yourself to special equipment, this will also be added.
  • These items result in a total. 1% of this total is now added to your operating income every month - hence the name "1 percent rule".
  • In addition, € 0.30 is estimated per kilometer driven.

A sample calculation best shows how the 1 percent rule for company cars works.

Example for the calculation of the 1 percent rule:

  • Let's say the gross list price of your company car is € 20,000.
  • You have also opted for special equipment (e.g. leather seats) for € 5,000.
  • The total price would have been € 25,000 at the time of initial registration.

And that price is the basis even if you drive a used car. 1% of € 25,000 is € 250 - this is your monetary benefit, which is calculated monthly as a fictitious income. This increases your profit (and thus proportionately also the tax burden) by € 3,000 per year. This is specifically the tax consideration for sole proprietorships or freelancers.

  • Note: In the case of companies such as the GmbH or the UG, tax considerations are somewhat more complex if you, as the managing director, use the company car privately. In this case, the monetary benefit is added to the salary. The 1 percent rule results in higher salaries for the company. For the managing director, the net salary falls. At the company level, the increased wages and salaries are offset by income on which sales tax is payable.

However, you can see from this invoice: The 1 percent rule is favorable for you if the gross list price of your vehicle is very low or if you often use your company car for private purposes. If neither is the case, the second option of taxation is probably the cheaper alternative for you.

4. Keep an (electronic) logbook

You record all journeys that you make with your car in a logbook. At the end of the year, only those trips that you actually took privately are taxed as a pecuniary benefit. If there are only a few, the logbook is much cheaper for you. Even if several drivers use the company car, a logbook can be useful - otherwise any violations will fall back on the vehicle owner, unless the driver can be determined otherwise.

However, a logbook is also associated with a lot of effort, because the tax office has high standards. If these requirements are not met, the tax office can subsequently apply the 1 percent rule instead of the logbook:

  • A logbook must be kept continuously (all year round), completely and promptly (as soon as possible after every trip). Every single trip is to be noted.
  • It must not be possible to manipulate a logbook. Loose sheets are therefore not valid, and neither is a self-made Excel table.
  • The following information must be recorded for each trip: date, destination, purpose of the trip (e.g. with the name of the customer), mileage at the beginning and end of the trip, unavoidable detours.

Since an entry is quickly forgotten, the use of an electronic logbook is recommended. However, caution is advised here too, because the tax office only accepts software that meets all requirements 100%. We recommend the electronic logbook if you want to be absolutely sure. For this purpose, we compared different providers for the electronic logbook.

Comparison: 1 percent rule or logbook?

You can see the advantages and disadvantages of the 1 percent rule in the following comparison.

The 1 percent rule is good in the following cases:

  • Your vehicle has a low gross list price.
  • You use the vehicle for the most part privately.

The 1 percent rule is unfavorable in the following cases:

  • The vehicle has a high list price.
  • The vehicle belongs to a vehicle fleet or a fleet.
  • You mainly use the company car for business purposes.

 

So if you use it predominantly for business purposes, in the vehicle fleet and in fleet management, you should always use a logbook.

Switch between 1 percent rule and logbook?

You can only switch between the two methods at the beginning of the year - unless you buy a new car in the current financial year. Are you thinking about a change or are you making the decision for the first time? Then find out more about the electronic logbook here.

5. Conclusion: Don’t give anything to the tax office

Those who use the 1% rule often pay too many taxes.

If, as a start-up, you use your vehicle for more than 10% for business purposes, you can treat it as a company vehicle for tax purposes. If you have more than 50% business trips, you even have to do this. If you then also use the company car privately, the tax office sees this as a pecuniary benefit that must be taxed. There are two ways of determining the monetary benefit. Either you keep a logbook that gives you precise information about how often and how far you have driven privately. Or you can use the flat-rate 1 percent rule: Each month, one percent of the gross list price of the vehicle is added to your taxable operating income. This is less time-consuming and is particularly worthwhile for cheaper cars. Using a logbook is now very easy thanks to digitization. Read our current comparison.

Electronic logbook provider

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.