Can your private car be claimed as a business expense? That depends on whether it is assigned to your private assets or business assets.
Determining business usage frequency of your car
In order to determine the extent of the business use of your car, we recommend that you keep a log of all your journeys for a period of three months. These records can be made informally and are then valid beyond the three-month period. If anything significant changes, such as a change of vehicle, you should make these records again.
Business Use Under 10%
If you use your car for business purposes less than 10% of the time, unfortunately, you cannot deduct the actual costs as business expenses. However, you can claim a standard mileage allowance of €0.30 per business kilometer driven.
Commuting between home and business:
One-way distance: €0.30 per kilometer
From the 21st kilometer onward: €0.35 per kilometer
This mileage allowance covers all car-related costs, such as fuel, car tax, insurance, and maintenance.
Business Use Between 10% and 50%
If business use is between 10% and 50%, you can choose:
Private Asset: Only business trips can be deducted using the mileage allowance.
Business Asset: All business expenses are deductible, but keeping a mileage logbook is mandatory. The 1% method cannot be applied.
Business Use Over 50% but Less Than 100%
If the car is used more than 50% for business, it is automatically considered a business asset.
✔ All business expenses are deductible
✔ Private use must be taxed using either the 1% method or a mileage logbook
Important: The logbook method can be more advantageous but requires thorough documentation.
100% Business Use
If the car is used exclusively for business:
✔ All costs are fully deductible
✔ VAT on car expenses can be claimed as input tax
✔ No logbook or 1% method is required
Caution: 100% business use is only accepted in exceptional cases, such as for vans with closed cargo compartments.
Taxation of Private Use of a Business Car
1% Method
✔ Applies when the car is used more than 50% for business
✔ Taxation: 1% of the car’s gross list price per month as private use
✔ Additionally: 0.03% of the gross list price per kilometer for commuting between home and business
Since 2024: From the 21st kilometer onward, the commuting allowance is €0.38 per kilometer (valid until 2026).
Advantage: Less administrative effort compared to keeping a mileage logbook.
Mileage Logbook Method
✔ Records the actual private use
✔ The private portion is multiplied by the total costs and taxed as business income
✔ Particularly beneficial if you mainly use the car for business or if the vehicle has a high gross list price
Requirements for the logbook:
Date, destination, business partner/activity, starting/ending odometer reading
Electronic logbooks with GPS make documentation easier
Special Rules for Electric and Hybrid Vehicles
Electric vehicles: 0.1% method instead of 1%
Hybrids: 0.5% method, depending on purchase year and battery size
Commuting: no tax benefit
Leasing
Whether leasing costs can be deducted as business expenses depends on the vehicle’s tax treatment.
✔ In most cases, the car is not considered a business asset
✔ For business trips, leasing payments are deductible
✔ Private use must be taxed using either the 1% method or the logbook method
Do you need support?
For our clients:
Feel free to reach out to us anytime at kontakt-team@smarta-steuern.de or book a consultation here – we're here for you!
Not a smarta client yet? No problem!
Book an appointment here for our comprehensive startup package or a consultation if you only have questions about specific topics.
Further questions?
Contact us via the app or by email at kontakt-team@smarta-steuern.de if you want to learn more about our consulting services or have other tax-related concerns.