A company car is an important part of many companies and offers employees and the self-employed an attractive opportunity to remain mobile for business and often also privately.
What is a company car?
A company car is a vehicle used for business purposes that is available either exclusively for business purposes or also for private use. Depending on the agreement, the vehicle can be used by employees or management.
Advantages of a company car
- Cost savings for employees: Employers usually cover purchase, maintenance and insurance costs.
- Tax advantages for companies: Company vehicles can be deducted as business expenses.
- Flexibility: Vehicles are available for business trips at any time.
- Attractive addition to salary: A company car can be part of the remuneration package as a non-cash benefit.
Company cars and tax regulations
The private use of a company car is subject to taxation as a non-cash benefit. There are two common methods:
- 1% rule: Every month, 1% of the gross list price of the vehicle is taxed as a non-cash benefit.
- Logbook method: Actual private use is precisely documented and taxed accordingly. This method is often cheaper, but requires detailed records.
Insurance and maintenance
Company cars are usually covered by fleet insurance, which offers more favorable conditions for companies. Maintenance and repairs are usually covered by the employer or regulated by leasing contracts.
Transfer agreement for company cars
A clearly defined company car transfer agreement regulates use and prevents misunderstandings. Important points are
- Scope of use (business/private)
- Assumption of costs (fuel, maintenance, insurance)
- Return upon termination of the employment relationship
- Behavior in the event of damage
Conclusion
A company car is an attractive option for companies and employees who need to be mobile for business. Tax aspects, insurance and a clear contractual arrangement should be carefully considered in order to make the most of the financial and legal benefits.
