Registering the company car as a business expense can be problematic. If you use a car for your freelance work, you can state the expenses for it with the tax office as operating expenses. However, this is not possible if the employee is additionally employed and the boss takes over the costs for the company car.
Be careful if the costs for the company car are completely taken over by the employer
Employees with additional income from self-employment may claim operating expenses in their income tax return – for example, for a car that they use for their own business. Precondition for this: The taxpayer himself pays the expenses.
The situation is different, however, if the employer bears all costs for the car and the private use is taxed according to the so-called 1 percent rule. Then the employee may not report the expenses to the tax office. This was decided by the judges of the Federal Finance Court (BFH) in a ruling.
Withdrawing company cars from tax
In this specific case, a business consultant was allowed to use his company car without restrictions – for journeys as part of his employment, in his free time, as well as for his freelance work. His employer took over all the costs for the car. For private use, the car was taxed according to the 1 percent rule. The employee stated in his tax return of the independent income the car as business expenses. That refused the tax office.
Rightly so, the BFH judges decided. They held that the deduction of operating expenses was justified only if the taxpayer bears the expenses himself. The 1 percent tax also applies regardless of whether and how the car is used. Even though he used the car for his freelance work, the taxation rule did not give him any disadvantages. (AP)