The Dilemma: Flat Rate or Logbook?
If you use a company car privately, you must pay tax on this "benefit in kind". The tax office offers two methods, and choosing the right one can save you thousands of euros a year.
The 1% Rule (Flat Rate Method)
This is the standard. You pay tax on a monthly flat rate of 1% of the car's Gross List Price (GLP). Plus 0.03% per kilometer of distance to your workplace.
Example:
- VW Golf with €40,000 GLP.
- Monthly taxable benefit: €400 (plus commute).
- At a 42% tax rate, this effectively costs you about €168 net from your salary.
When is the 1% Rule worth it?
- If you use the car privately a lot.
- If the gross list price is low relative to the real running costs.
- If you hate paperwork (convenience factor).
The Alternative: The Logbook (Fahrtenbuch)
Here you only pay tax on the actual costs proportional to your private trips. If the car is cheap to maintain or you drive little privately, this is often much cheaper.
EVs: The Game Changer
Reduced rates apply to electric cars: 0.25% (up to €95k GLP) or 0.5%. This makes the flat-rate taxation almost unbeatable.
Conclusion: With combustion engines, calculate carefully (logbook often wins). With EVs, almost always choose the flat-rate rule.