The chaos with the correct company car taxation

3 years ago

Those were the days when you could clearly conclude the gross list price from the 1% valuation and immediately knew: “wow, this executive drives a fancy sleigh when 834 € per month was taxed for private use”.

Nowadays it’s different, because there can be a tender 150 € for the valuation of private use and anyone who thinks this is an unattractive small car has thought wrong, because there can also be an Audi A3 as a plug-in hybrid variant or even a pure electric variant e.g. a Mercedes EQA 250 or even a Tesla Model Y.

It has never been as complex as it is today to correctly evaluate a company car and to document the valuation in a comprehensible way for tax and social security auditors.

How should the environmental bonus be treated?

The first pitfall already arises with the so-called purchase premium or environmental bonus, which is available when purchasing electric vehicles as new cars; however, this may not have any influence on the valuation of the non-cash benefit for the employee, because the gross list price as the basis of assessment for the valuation of the non-cash benefit may not be reduced by the environmental bonus.

When are hybrid/electric vehicles eligible?

The next question quickly arises, how can it be seen for payroll accounting whether it is an eligible hybrid or electric vehicle at all?! This is quite simple, I was recently told by a specialist; a quick look at the official vehicle registration number is enough, because it ends with the capital letter “E” or the coding in the vehicle registration certificate can also help: Here you will find code 004 and 0015 for electric vehicles and codes 0016-0019 and 0025-0031 for hybrid electric vehicles in Part 1, field 10 of the vehicle registration certificate. Easy, right?

Not at all! Depending on the year of acquisition, different deductions or reductions must be observed for the correct assessment and this applies to the years 2013 to 2030. For example, up to and including the year of acquisition 2018, the tax benefit still had to be calculated with limited reduction values per kWh, while from the year of acquisition 2019 the gross list price is to be assessed at 50% (plug-in hybrid) or 25% (for pure electric vehicles) from 2020 onwards under certain conditions. Very exciting here is the different assessment of which year is the actual decisive year for the calculation, so the respective flat-rate discount according to kWh as well as the maximum amount is generally determined according to the year of purchase and, in the case of used cars, according to the year of first registration. On the other hand, the year of purchase always applies to the 50%/25% valuation – regardless of whether a new or used car is provided.

Decisive gross list price: the linchpin for company car taxation

I hope you can still follow me, because one very important point is still missing and this is the decisive gross list price, which must be used for the correct valuation. In this context, it is completely irrelevant for the 50%/25% valuation whether the employer acquired the vehicle as a new vehicle during the beneficiary period or not, because the reduced assessment of the gross list price also applies to used electric and hybrid electric vehicles that have been or will be purchased as company cars during this period. It should be noted that the gross list price at the time of first registration is always decisive for the correct calculation of the respective reduction amount, both for the 50% (plug-in hybrid variant) and 25% (pure electric variant) approach and for the flat-rate discounts depending on the battery capacity (kWh). Finally, it should be mentioned that if hybrid vehicles do not meet the requirements of Section 3 (2) nos. 1 and 2 of the Electric Mobility Act, e.g. because they do not achieve a minimum electric mileage of 40 kilometres or, from 2022, 60 kilometres, then the flat-rate deductions of EUR 200 to EUR 50 and the maximum limits of EUR 7,000 to EUR 5,500 in the period 2019-2022 must be taken into account in these cases.

Perfect and now a new employee is standing in the HR department and is beaming to tell us that he will be able to pick up his new BMW iX xDrive50 – a purely electric variant – next month … think about a pure electric variant, but the gross list price is over 60,000 € therefore not 25% of the BLP, but 50% of the BLP – it’s all very simple …!!

Our customers in payroll accounting can sit back and rely on the know-how of their experienced external colleagues at ICS adminservice. Special features in accounting are ICS day-to-day business, as well as special features in payroll accounting in a wide variety of industries. We are familiar with this and are always up to date. Learn more about the service model for your payroll accounting in professional hands.

Image source: AdobeStock Photographer: rottadana

Author

Christiane Droste-Klempp
Guest author

Christiane Droste-Klempp is an independent consultant for the entire area of payroll accounting with a focus on partial retirement, time value accounts and company pension schemes and has been an experienced speaker for payroll accounting and partner and trainer of ICS adminservice GmbH for many years.

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