For many entrepreneurs it is still unclear what the tax consequences for the company car are and what administrative obligations you have to meet.
What are the advantages and disadvantages for income tax and sales tax?
Because in almost all cases an entrepreneur uses a passenger car for both business and private purposes, the car belongs to the choice capacity. This means that a choice is made by the entrepreneur or the passenger car is an entrepreneurial power or a private capacity. In the examples below we take them briefly, for detailed information you can contact one of our SME advisers.
Corporate income for the income tax
If the entrepreneur opts for corporate income tax, all costs, expenses and depreciation can be deducted. When the car is used for private purposes for more than 500 kilometers, there is an advantage. This benefit must be included in the taxable income from work and home (box 1 income) (addition).
The addition for the private use of a car that was first used more than 15 years ago (also known as the youngtimer), is at least 35% of the value of the car in economic traffic.
If the car is used for private purposes for less than 500 kilometers, the statutory addition may be omitted. To demonstrate this, a correct mileage administration must be kept. In addition, commuter traffic does not count as private use.
Business assets for turnover tax
As an entrepreneur, the VAT on purchase, maintenance and fuel can be deducted in proportion to the business use. Then, at the end of that year, VAT must be paid on the actual private use. To do this, a journey administration must be kept. In this case, commuter traffic, unlike wage and income tax, applies as private use.
If no mileage administration has been kept, at the end of the year 2.7% VAT must be paid on the catalog value of the car. For cars that have been used in the company for more than five years or margin cars, no 2.7% but 1.5% applies.
Private car and yet VAT advantage
As an entrepreneur the VAT on maintenance and fuel can be deducted in proportion to the business use in relation to private use. It is wisdom to this in the fourth e do quarter of the year, so you need to submit unnecessary tax supplementation (correction on the VAT). In order to qualify for this VAT deduction one must keep a journey administration.
capital and income tax If the entrepreneur charges the car for private capital, he may deduct the trips made with this car for business purposes (also called business trips) against € 0.19 per kilometer driven. To do this, one must keep a trip administration.