Working from home has become increasingly important in today’s workplace. For many company car drivers and businesses, using a company car while working from home has also become part of everyday life. But how does using a company car while working from home affect taxation, and what do you need to keep in mind? In this blog post, you’ll learn everything you need to know about this topic.
Standard Tax Treatment of Company Cars
If the company car may also be used for personal purposes, the resulting benefit in kind must be taxed for the employee. As a general rule, the benefit in kind from company cars is taxed according to the so-called 1% rule. Under this rule, 1% of the list price is assessed monthly as a benefit in kind and is subject to tax. In addition, for each trip between the employee’s home and the primary place of work, a flat rate of 0.03% of the list price per kilometer traveled is considered a benefit in kind and is subject to taxation.
Calculation example
An employee is provided with a company car by his employer. The car’s gross list price is 40,000 euros. The employee uses the car for both business and personal trips from his home. He must pay taxes 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 car’s gross list price per month:
- 1% of 40,000 euros = 400 euros
If an employee drives a company car worth 40,000 euros 30 km to work, an additional 360 euros per month is subject to tax:
- 0.03% of 40,000 euros = 12 euros
- 30 kilometers × 12 euros = 360 euros
This results in a monetary benefit totaling 760 euros, which must be added to the employee’s taxable income and taxed accordingly. The 1% rule is particularly advantageous from a tax perspective for employees who frequently use their company car for personal purposes. If the proportion of personal use is low, it is generally recommended to keep a logbook instead.
Taxing a Company Car While Working From Home
The same rule applies when using a company car while working from home: If the vehicle is used for personal purposes, the benefit in kind is subject to tax. If an employee does not use a company car for personal purposes while working from home, they do not have to pay tax on it.
If the employee has previously reported the company car for tax purposes under the 1% rule, nothing changes even when working from home. The 0.03% of the list price for each kilometer traveled between home and the primary workplace must also be taxed. This is because the tax office assumes, as a general rule, that employees commute between their home and primary workplace at least 15 times a month using the company car.
An Alternative to Company Cars: The 0.002% Rule
If an employee drives a company car to the office fewer than 15 times a month, each trip can be taxed individually under the 0.002% rule. This special rule applies only if the company car is used for trips between the employee’s home and place of work on no more than 180 days per year. In that case, the 0.002% rule applies as a significantly more favorable method of calculation.
Calculation Example: 0.002% Rule vs. 0.03% Rule
In the previous example, based on the 0.03% rule, the employee had a taxable amount of 360 euros:
- 40,000 euros × 0.03% × 30 kilometers = 360 euros
Assuming the employee uses the company car (gross list price: 40,000 euros) only 10 days a month to commute to the office, the following calculation example applies using the 0.002% rule:
- 40,000 euros × 0.002% × 30 kilometers × 10 days = 240 euros
Instead of a tax burden of 360 euros per month, the amount comes to 240 euros— a savings of 120 euros. If employees wish to take advantage of this provision, they must document all trips to the office in writing for the tax office.
How to Save on Taxes for a Company Car While Working from Home
To keep the monetary benefit as low as possible, employers and employees can follow a few tips:
- Provision in the Employment Contract: If the employment contract stipulates that the employee may also perform work in their own home, this may be taken into account when calculating taxes.
- Use the company car only for business trips: The less the company car is used for personal purposes, the lower the additional tax burden will be. Therefore, it is advisable to use the company car only for business trips. For everything else, a personal vehicle can be used instead.
- Keeping a logbook: A logbook can help you accurately document business and personal trips. This allows you to calculate the amount precisely and avoid paying unnecessary taxes.
Frequently Asked Questions About the Taxation of Company Cars When Working from Home
Yes, the car must also be fully insured when used in a private office, since it is used there as well. However, it is a good idea to check with your insurance company in advance to see if there are any special rules regarding its use.
No, if the company car is used exclusively at the home office and no personal trips are taken with it, taxation under the 1% rule does not apply. However, a detailed logbook must be maintained to record the use of the company car in order to provide proof in the event of a tax audit.
Yes, if an e-bike or bicycle is used for business trips instead of a company car, taxes can be reduced. This is because the personal use of e-bikes and bicycles is tax-free.
Conclusion: Taxing Company Cars When Working from Home
Using a company car while working from home affects the taxation of the non-cash benefit. However, with a few simple measures—such as keeping a logbook or providing a secure parking space—the taxable benefit can be reduced. Alternatively, using an e-bike or bicycle for business trips can also reduce the taxable benefit. A so-called mobility budget offers employees flexibility in choosing their mode of transportation. You can learn more about this in our article“Mobility Budget Instead of a Company Car: Good for Employees and the Environment.”
