Due to tax benefits more businesses have decided to purchase electric cars. The connection of private and business use is now increasingly examined by the tax office.
In case of private usage of the electric company car by the employee no benefit in kind is eligible. The employer also does not have to pay any incidental wage costs (employer payments for social insurance, DB, DZ or municipal tax) for the benefit in kind. Additional benefits of electric cars are that they are excluded from the standardize consumption tax (NOVA) and motor related insurance tax.
Input tax can be fully deducted up to € 40.000,00 upon the new purchase of a car used for business. If the purchase price is between € 40.000,00 and € 80.000,00 the luxury tangent (limit to determine whether a business car price is reasonable) of € 40.000,00 is exceeded. In this case the full input tax can be deducted in a first step. Later the part for the amount exceeding € 40.000,00 has to be neutralized with a corresponding private income taxation (“Eigenverbrauchsbesteuerung”).
In case the purchase price exceeds € 80.000,00 no input tax can be deducted.
Thus input tax deducted for E-Cars is limited with € 6.666,67 (€ 40.000,00/120*20).
100% usage for business
So that business usage is recognized and input tax can be deducted, there has to be a business related usage of at least 10%. This can be an issue, if employees don´t use their electric business cars everyday for work. Car rides between an employee’s home and place of work are not business related private rides. This 10% threshold is now increasingly checked on by the tax authority.
In order to prove that the 10% threshold is exceeded we recommend to keep a driver´s logbook.