The provision of a company car by employers to employees for private use and for journeys between home and the first place of work constitutes a material value for the employee. In addition to the regular salary the value of personal use is the amount that the employee saves as a result of the provision of a company car. For this purpose, the usage ratio must be determined either by means of a proper driver’s logbook, the 1% rule or, in the case of journeys between home and the first place of work, by means of the 0.03% rule. Special regulations apply to hybrid and electric vehicles.

An employer had provided two employees each with a car that could also be used for private purposes. The ratio of business and private journeys was determined for both cars by means of a logbook. During an external audit, the tax authorities determined that the employer had used average values for fuel consumption to calculate the imputed income. This was due to the fact that the employer had their own filling station that did not display the amount and price of the fuel filled up. Such an estimate is not permitted according to the tax authorities.

The Federal Fiscal Court (Bundesfinanzhof, BFH) supported this view. If costs of the car provided that have not been recorded based on supporting documentation are estimated, application of the driver’s logbook method is not permitted. A driver’s logbook is intended to determine the ratio of business and private journeys. The costs actually incurred and also documented shall be apportioned accordingly. An estimate cannot therefore be made by the very wording of the law, even if a margin of safety was used as a basis. Supporting documents are absolutely necessary.

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