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Home office and tax treatment of company cars and possible reimbursement
5. Oktober 2020
For many employees and companies, the home office has become part of everyday life during the crisis. Here you can find out everything about home office and tax treatment of company cars and the possible reimbursement of costs by the employer.
The Corona pandemic has forced many employees to work from home. However, this compulsion has turned out to be something positive for most, so that the so-called home office is now more popular than ever. We have already taken up the topic of the home office in some of our articles and have given you an overview of the importance of home office agreements according to § 106 of the German Trade Law and the possibility of deducting the costs of the home office in the Corona crisis. Because home office and tax treatment of company cars are equally relevant for companies and employees.
In the following, therefore, we would like to give you an understanding of the special features of company car taxation and reimbursement of costs by the employer for existing home office agreements.
Home office and tax treatment of company cars
If an employer provides his employee with a company car, which the employee can also use for private purposes, the monetary advantage for private use amount to 1% of the gross list price per month. In addition, the employee has to pay tax on a non-cash benefit of 0.03% of the gross list price for trips between home and the first workplace.
In the case of use of less than 15 working days per month, an individual assessment of the trips at 0.002% of the gross list price at the time of initial registration per distance kilometre is possible. Upon the employee’s request, the employer is obliged to perform the daily calculation with 0.002 % of the gross list price if the employee provides the employer with a monthly written statement of the actual trips to the first workplace.
What is considered as the first workplace when working in a home office?
If there is a home office agreement between the employee and the employer, the question of the first workplace must first be clarified. The home office can never be the first workplace in the fiscal sense. This is because the home office is not a business establishment of the employer and thus excludes the possibility of a first workplace.
If the employee performs his work partly in the home office and partly in the company, first it depends on whether there is a contractual assignment of the first workplace. If the employer has not explicitly specified an assignment in the employment contract, the quantitative criteria will decide in a second step. If there is no contractual assignment and the employee only occasionally comes to the company for appointments, there is no first workplace. As a result, taxation of the monetary advantage for trips between home and the first workplace is not applicable.
However, if a first workplace exists, for example due to an employment contract assignment, the employee can apply the 0.002% daily flat rate.
Important: A change between the 0.03% monthly flat rate and the 0.002% daily flat rate is not possible during the year.
Special case of company car taxation in the Corona crisis
If the employer leaves the company car at the employee’s disposal during the entire Corona pandemic and if the employee may use it for private trips, the monetary advantage continues to be taxed monthly at 1% of the gross list price.
Also for trips between home and first workplace for the calculation of the monetary advantage, the regulation with 0.03% of the gross list price applies in principle. An exception could possibly only exist if work is only done in the home office for the entire corona pandemic (and thus for months).
Reimbursement of expenses for the trips for home office work
Among other things, the employer can reimburse the employee‘ expenses for the trips. If the employee’s first workplace is in Germany, the employer can only reimburse the distance kilometres with the statutory distance allowance. The resulting amount is taxable, but can be taxed at a flat rate of 15%.
If a first workplace is not available, you must treat all expenses for the trips as travel expenses and you will receive a free reimbursement. If the employer does not reimburse these costs, the employee can claim the costs as income-related expenses in his income tax return.
Reimbursement of electricity and rental costs for home office work
A flat-rate reimbursement by the employer for expenses incurred in the home office (for example, electricity or rent) is always taxable salary. A cash allowance is only possible for telephone and internet costs if the employee uses his own hardware and software and bears the costs himself. The subsidy is taxable at a flat rate of 25%. However, proven operating costs can be reimbursed tax-free.
Reimbursement of material costs for home office work
In addition, the employer can reimburse the costs of equipping the home office. This includes, for example, a laptop, monitors or even a printer. If the equipment belongs to the employer, this transfer does not constitute a taxable monetary advantage. This also applies if the employee may and can use the equipment privately.
If the employer transfers equipment or software to the employee, the value of the transferred goods is taxable as taxable income. A flat rate of 25% can be applied..
If the items are the property of the employee, the employer can reimburse the employee’s costs on a lump-sum basis. However, the lump-sum reimbursement of costs again represents taxable income. The employee can then claim the professionally incurred costs in his income tax return.
If the employee performs his work exclusively or predominantly from home, it is crucial to make agreements in advance.
You should pay particular attention to the tax aspects and consequences. A number of special features can arise in connection with the taxation of company cars and the various cost reimbursements. Even employees with limited tax liability who work abroad from their home office must observe numerous tax exceptions and regulations. Please contact us at any time, we will be happy to advise you.