Going on vacation with a company car: What is and is not allowed for tax purposes.
Going on vacation in an official car – is that allowed at all?? What does the local tax office say? Basically, the same rules apply on vacation as for private trips at home. Any differences only arise from the employer's regulations on the use of the company car on vacation, for example on the deductible for the costs per kilometer or in the event of an accident or theft. What to consider in terms of tax when taking a vacation with the company car, is in this series of articles.
Basis: Who pays for my private trip with the company car??
One of the biggest problems of understanding the private use of a company car is the difference between the actual costs incurred and the tax payable on a private benefit. A brief overview:
1. Many employees are also allowed to use their company car privately.
2. Costs are incurred for private trips with the company car. This includes, for example, gasoline, wear and tear, as well as prorated road tax and insurance.
3. There are employers who kindly cover these costs in full. Others have it completely reimbursed by the employee. Partial reimbursement, i.e., cost sharing, is also common.
4. Whenever a company boss pays even one euro of the privately incurred costs, a financial advantage accrues to the company car driver. This benefit is equivalent to an additional salary that the driver must pay tax on at his or her personal tax rate. In technical jargon, this is referred to as a taxable "pecuniary advantage".
5. If incidental expenses are incurred during the private trip, which are paid by the employer, this is also a taxable non-cash benefit. These include, for example, freeway toll stickers, toll charges and the ADAC protection insurance. Only if these costs can be proven to have been incurred on a business trip may the employer reimburse them tax-free.
6. If the employee pays tax on his or her personal use, the tax will be less than the actual cost generously paid by the employer if the deduction method makes sense.
All points apply to private trips just as they do to vacation trips with a company car: costs are incurred, someone has to bear these costs and, if applicable, the employee has to pay taxes on his private benefit.
Determine privately incurred vacation travel expenses
To determine the tax on private company car trips at home or on vacation, there are two methods: the simple but expensive flat-rate one percent method and the more elaborate, accurate, but usually cheaper logbook method. Which of these is preferable and when is explained in the comparison of accounting methods, including an example calculation.
If you determine your private benefit according to the logbook method, the entire vacation is treated as a single private trip. Before you go, enter the date, time and mileage. You do the same if you are back home after 14 days.
You have determined your privately incurred travel costs using either the flat-rate one percent method or the logbook method. The next thing to check is whether you are allowed to deduct money that you have already paid from the taxable amount determined. Because some employers require their employees, for example, to make a monthly contribution to the cost of the company car or to pay for the cost of gasoline.
Employers often treat private trips abroad or generally on vacation differently than during normal working hours. For example, they require a higher contribution to the costs for this time. Check this in your employment contract and in the company regulations.
Conclusion: Company car + vacation is no problem for tax purposes
From a tax perspective, it makes no difference whether you drive your company car privately at home in Germany or on vacation in Spain. The only question that may arise is the taxation method: If the vacation trip results in many thousands of private kilometers, the one-percent method may be more favorable than the logbook method. If you keep a logbook throughout the year, you are on the safe side here: you can ultimately choose the most favorable way from both taxation methods. During the vacation, the logbook does not even mean additional work, because you only need to enter the mileage before the start and after the end of the vacation.
When it comes to theft, accidents and damage to the company car, the tax rules are also the same as if such a case were to occur during a trip in Germany. If the employer pays the costs incurred, depending on the taxation method and the factual situation, it must be checked whether a taxable non-cash benefit arises for the company car driver. In this case, the one-percent method may be financially more favorable because it often already covers such expenses.
Only the employer often makes a difference where you drive your company car. Therefore, before you start your trip, take a look at the company car usage contract or the company car guidelines of your employer! Often there are, for example, deductibles in the event of an accident or theft, or a higher reimbursement for private trips abroad. Some bosses stipulate that only the employee may drive the vehicle on vacation. Pay particular attention to whether a contribution to the operating costs of the vehicle is provided for! Because such an additional payment is not compatible with the one percent method from a tax point of view.
Questions and answers about company cars on vacation
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Question 1: How are "mixed" Travel treated as business appointments at the vacation location?
Answer: According to a ruling of the Federal Fiscal Court (BFH), a business trip may be extended by a few days of vacation. In the case in question, an employee had attended a four-day conference and added three days of vacation. The BFH judges ruled that the employee is allowed to deduct four sevenths of the flight and accommodation costs as income-related expenses (file number: VI R 94/01).
Prerequisite: The share of the business-related stay is at least 15 percent.
This ruling can also be applied to a vacation trip with a company car: You are allowed to split the costs you bear, for example for fuel and tolls, according to the time shares. Example: Those who travel 2.5 days for their company during their two-week summer vacation can deduct 17.86 percent of the costs as income-related expenses or have their boss reimburse them tax-free.
Question 2: What do I have to enter in the driver's logbook, if I take care of professional appointments during a vacation trip?
Answer: If you have a business appointment during your vacation and drive your company car to it, you will carry the route "hotel – appointment – hotel" with the kilometers traveled and any necessary detours as a business trip in the logbook a.
Question 3: How can I cover as many kilometers as possible during my vacation trip for professional reasons??
Answer: smart company car drivers schedule a work-related appointment on the day they want to leave home for vacation. This appointment is as far away as possible from the place of residence and on the route to the vacation. Then they carry this trip "workplace – appointment" as a business trip in the driver's logbook and only begin their private trip to the vacation from the appointment. This trick also works on the day of return.