Analysis of Company Car Taxation: Logbook Method Saves a Lot of Taxes

A recent analysis by Vimcar, a leading provider of digital and tax-compliant logbooks, examined 61,782 vehicles in Germany and determined the most popular company cars in the compact, mid-size, and luxury classes, as well as compared their tax burden using the one-percent rule versus the logbook method.

Logbook saves an average of 2,785 euros in taxes annually

Those who keep a logbook can save real money compared to the flat-rate taxation of one percent of the gross list price. This is shown by the analysis of Vimcar, which compared the tax burden of three of the most popular company car models using the one-percent rule versus the logbook method. Depending on individual driving performance and private use, up to 3,747 euros per year can be saved with a BMW X5 as a company car in this example. For the Audi A6 Avant, the savings amount to 1,916 euros annually. Drivers of a Ford Transit company car save 2,107 euros per year. Data from Vimcar's company car calculator show that company car drivers save an average of 2,785 euros per year with the use of a logbook.

51 percent of German company cars are small cars

51 percent of German company cars for which a digital logbook is kept fall into the small car segment. The most popular model here is the VW Golf, followed by the Ford Transit and the Audi A4 Avant. 37 percent of employees and freelancers with company cars drive a mid-size car. The most popular vehicle in this category is the VW T6, followed by the BMW 5 Series Touring and the Audi A6 Avant. Just over one in ten (twelve percent) company car owners treat themselves to a luxury car. The most popular here is the BMW X5, closely followed by the Porsche 911 and the Mercedes-Benz GLE.

One Percent Rule versus Mileage Log 

If employees or self-employed individuals use a company car for private purposes as well, they can choose between flat-rate taxation via the so-called one percent rule or keeping a mileage log for taxation purposes. With flat-rate taxation, one percent of the gross list price of the company car is taxed as a non-cash benefit each month. For the commute, an additional 0.03 percent of the list price per single distance kilometer is added.

Alternatively, employees with a company car can keep a mileage log and only need to tax those distances driven privately, plus the commute with 0.03 percent of the list price per single distance kilometer.

New Tax Advantage for E-Company Cars: When Is a Mileage Log Worthwhile?

At the beginning of September, the federal government increased the threshold for tax benefits for e-company cars. Those who opt for a purely electrically powered company car with a gross list price of up to 95,000 euros will see their flat-rate taxation drop to 0.25 percent. Previously, this applied to e-company cars with a list price of up to 70,000 euros. For electric company cars with a list price over 95,000 euros and hybrid vehicles with a minimum range of 60 kilometers, 0.5 percent of the list price must be taxed. Despite the tax advantage, keeping a mileage log can also be worthwhile with an e-company car: In this example, the savings, depending on individual driving performance and private use, amount to 1,051 euros per year for a BMW i4 as a company car, 546 euros for a Tesla Model Y, and 1,468 euros annually for a Mercedes EQE.