Monthly Taxable Benefit
787,50 €
Annual Taxable Addition
9.450,00 €
Estimated Tax on Benefit
3.307,50 €
How does the 1% rule (1%-Regelung) work for business vehicles in Germany?
The 1% rule adds 1% of the car's gross list price (Bruttolistenpreis) per month as a taxable benefit for private use. Additionally, for commuting, 0.03% of the list price per km of one-way distance is added monthly. The list price is the original manufacturer's suggested price including VAT, regardless of what you actually paid.
When is a mileage log (Fahrtenbuch) better than the 1% rule?
A Fahrtenbuch is typically more beneficial when: the business use exceeds 80-90%, the car has a high list price but low actual costs, or you drive relatively few private kilometers. You must meticulously record every trip with date, destination, purpose, and kilometers. The Finanzamt strictly audits Fahrtenbücher.
Can electric vehicles benefit from reduced taxation?
Yes, pure electric vehicles (BEV) with a list price up to EUR 100,000 benefit from the 0.25% rule instead of 1% for private use taxation. Plug-in hybrids may qualify for a 0.5% rule if they meet certain electric range requirements. This significantly reduces the taxable benefit.
Disclaimer: These calculations are estimates based on 2025 German tax rules and should not be considered professional tax advice. Consult a Steuerberater for your specific situation.
Firmenwagen rules, the 1% method, and how to optimise your company car tax
What is the 1% rule for company cars?
If your employer gives you a company car (Firmenwagen) for private use, you must pay tax on the benefit. The 1% rule means you add 1% of the car's gross list price to your taxable income each month. A car with a list price of €40,000 adds €400 per month or €4,800 per year to your taxable salary.
What is the Fahrtenbuch alternative?
Instead of the 1% rule, you can keep a Fahrtenbuch (logbook) that records every journey. You then only pay tax on the private share of actual costs. This is better when private use is low. If the car costs €8,000 per year to run and only 20% is private, you pay tax on €1,600 instead of €4,800 under the 1% rule.
How are electric company cars taxed?
Electric cars get a significant tax discount. If the list price is below €70,000, you only pay 0.25% per month instead of 1%. A €50,000 electric car adds just €125 per month to your taxable income, compared to €500 for a petrol car at the same price. Cars above €70,000 are taxed at 0.5%.
How is the commute to work taxed with a company car?
On top of the 1% rule, you add 0.03% of the list price per km of your one-way commute each month. If your commute is 25 km and the car lists at €40,000, that is €40,000 × 0.03% × 25 = €300 per month extra taxable benefit. You can offset this with the Entfernungspauschale of €0.30 per km (€0.38 from km 21) in your tax return.
Can self-employed people deduct vehicle costs?
Yes, self-employed people can deduct all costs for a vehicle used more than 50% for business, including fuel, insurance, maintenance, and depreciation. A car costing €35,000 is depreciated over 6 years, giving you €5,833 per year. If business use is between 10% and 50%, you can only deduct the business share of actual costs or claim €0.30 per business km.
What about VAT on company vehicles?
If you are VAT-registered, you can reclaim the VAT (Vorsteuer) on the purchase price and running costs of a business vehicle. For a €35,000 car plus 19% VAT (€6,650), you reclaim the full €6,650 if the car is 100% for business. For mixed use, you reclaim only the business share. You must also charge VAT on the private-use benefit.
Bundesfinanzministerium-Aligned: Based on 2025 Bundesfinanzministerium rates and thresholds. For personal advice, speak to a qualified Steuerberater (tax adviser).
Disclaimer: This calculator provides estimates based on current German tax rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax adviser before making financial decisions. Read our terms
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