The company car is a favorite perk in Germany. But as soon as the car is in your driveway, the tax office (Finanzamt) arrives. The flat-rate 1% taxation is convenient, but often an expensive grave for your net salary. When is the effort of a driver's log (Fahrtenbuch) worth it – and why do EVs change the rules completely?
How the 1% Rule Works
The tax office assumes you use the car privately. This is a "monetary benefit" (geldwerter Vorteil) that you must tax. The formula: 1% of the Gross List Price (BLP) per month is added to your taxable income.
Important: The list price at the time of first registration always counts – including optional equipment. Discounts your boss negotiated do not interest the tax office! In addition, there is 0.03% per kilometer for the commute to work.
Example (Combustion Engine):
- Vehicle: BMW 3 Series, List Price €60,000
- 1% Rule: €600 monthly taxable income
- At 42% top tax rate + social contributions, this costs you effectively approx. €300 - €350 net from your salary. Every month.
The Gamechanger: The 0.25% Rule for EVs
The state wants to promote electric cars. And how! For pure electric cars (below a certain list price cap, currently often €70,000!), you only have to tax 0.25% of the BLP.
Example (Tesla Model Y):
- Vehicle: Tesla, List Price €55,000
- 0.25% Rule: Only €137.50 monthly taxable income!
- Effective net burden: approx. €70.
Comparison: An equally expensive combustion car would cost you four times as much net!
When is the Driver's Log Worth It?
The driver's log (Fahrtenbuch) is the alternative to the flat rate. Here you only tax the actual share of private costs. It is almost always worth it if:
- You drive little privately: If you use the car 90% for business, you only have to tax 10% of the costs.
- The gross list price is very high: An expensive car drives up the 1% flat rate. If you barely move it privately, the flat rate is unfairly expensive.
- Actual costs are low: With a used company car or a vehicle that has already been fully depreciated.
Disadvantage of Driver's Log: The Effort
A logbook must be kept "promptly" and "closed". Typing it into Excel later doesn't count! The tax office is extremely strict here. Smallest errors, and the book is rejected → fall back to the 1% rule (often with hefty back taxes). Tip: Electronic logbooks (plug in the car + App) make life easier and are often recognized.
Conclusion: Calculate Before You Commit
Before you order the company car:
- Are you taking a combustion engine? Then a driver's log is often cheaper if you drive little privately.
- Are you taking an EV? Then the 0.25% (or 0.5%) rule is almost always unbeatable and saves you the stress of a logbook.
The company car is only a privilege if it doesn't eat up your net salary.
Prefer Private Lease Instead of Company Car?
Sometimes the "Car Allowance" (salary increase instead of car) is worth more.