The German 1% company-car rule explained

Flat-rate method or driver's log?

Private use of a company car is a taxable benefit in kind. Depending on the situation, it can be calculated using the flat-rate method or a compliant driver's log.

The 1% Rule (Flat Rate Method)

Under the flat-rate method, 1% of the gross list price is generally applied each month as a benefit in kind. Travel between home and the first place of work can add a separate amount.

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 prefer to avoid the documentation required for a driver's log.

The Alternative: The Logbook (Fahrtenbuch)

Here the private-use share of the actual vehicle costs is applied. A low private-use share or low actual costs can favour the driver's log over the flat-rate method.

Electric cars: reduced assessment basis

For eligible electric cars, the flat-rate method uses one quarter of the gross list price. Under current law, vehicles acquired after 30 June 2025 qualify up to a gross list price of €100,000. Other electric and certain plug-in hybrid vehicles may qualify for the half-rate basis.

Conclusion: Compare both methods using the list price, commute, private-use share and actual vehicle costs. The reduced assessment basis can favour an electric car, but it does not replace an individual tax calculation.