E-car as a company vehicle: New tax benefits adopted

The Income Tax Assistance Association has scrutinized and commented on the new resolutions to promote electric company cars. The federal government prematurely abolished the environmental bonus for the purchase of eligible electric cars at the end of 2023, as it was originally supposed to be granted under certain conditions in 2024 as well. However, it intends to strengthen electromobility with new tax improvements, as stated in a current government communication. In addition, the association further quotes that this is intended to support the automotive industry and its employees. To this end, the federal government has agreed on two new tax regulations and incorporated them into the ongoing legislative process for the Tax Advancement Act. The first new tax advantage involves raising the price cap for fully electric company cars to apply the so-called 0.25 percent rule, and the second tax advantage pertains to a special depreciation for businesses.

Tax advantages for fully electric company cars up to 95,000 euros

The basic rule is: Anyone who is allowed to use a company car privately must tax this usage as a monetary benefit. The simplest option for this is the flat-rate calculation: 1.0 percent of the gross list price must be taxed monthly. However, for an electric car with no CO2 emissions as a company car, only a quarter of that is due until the end of 2030, i.e., effectively 0.25 percent of the gross list price. With the following restriction: Initially, this regulation only applied to electric cars with a gross list price up to 40,000 euros, then the limit was raised to 60,000 euros and from January 2024 to 70,000 euros.

This means: The private use of a fully electric company car purchased in the first half of 2024 for, for example, 80,000 euros may not be taxed at 0.25 percent but must be taxed at 0.5 percent of the gross list price. However, the federal government now wants to retroactively increase this price cap as of July 1, 2024. Thus, fully electric company cars acquired from July of this year with a gross list price up to 95,000 euros could then be taxed using the reduced 0.25 percent method.