Under the old law extra payments by employees to the purchase expenses of a company car, which could also be used privately, could only be set off in the year of payment against non-cash benefits, to be assessed for private use (including commuting between home and work). Any payments made in excess were lost.
Under the new German Wage Tax Amendments Regulations, such extra payments by employees can be allowed as a credit against non-cash benefits not only in the year of payment but also in the calendar years following the year of payment. This leads to a significant simplification of proceedings, for companies and employees.
Where an employee makes a leasing extra payment, either completely or partly, this new treatment applies retrospectively.
German wage tax regulation R 8.1 (9) Nr.4 LStÄR 2011
For further information or to discuss any of the issues raised, please contact Joachim Menz on +49 89 2422 300.