Changes in the tax treatment of ‘extra payments’ to the purchase expenses of a company car

January 7, 2011

  Tagged Germany

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.

Resources

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.

CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

Copying
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.