Revenue / Taxes | EUR | EUR

monthly income | 921,00

monthly sales tax | 174.99

Total annual revenue | 11.052,00

Total annual sales tax | 2.099.88

Total revenue (6 years) | 66.312,00

Total total sales tax (6 years) | 12,599.28

Total annual income tax | 0.00

Proceeds of Sale | 30,000.00

Taxes on Sales Proceeds | 0.00

Total offsetting income and taxes less gross acquisition costs | 10.619.40

If you use a company car in the company for private trips, this has tax consequences. Because the private share of the use of the car must not play a role in the calculation of operating expenses. Therefore, with the journey log method or by flat-rate calculation according to the 1% rule, there are two methods by which the associated private removal is determined. However, as an entrepreneur you can partially lease a company car. For example, it is proven that business use is 90% and private use is 10%. So if you want to lease the company car from private, then best from the spouse. This is because he can also use the transfer to advantage from a tax point of view by opting for the collection of sales tax. This entitles an entrepreneur to deduct input tax. When selling, the spouse can then revoke the right to vote and thus positively influence the purchase price. Overall, you can even save more taxes than the acquisition cost of the company car.

A company car is often a point in tax terms where entrepreneurs meet conflicting interests. On the one hand, you would like to use the company car, for which you can set profit-reducing operating expenses, for private purposes. On the other hand, in the latter case, it must also be understood that the associated private costs must not cause operating expenses. Finally, the privately used share of the entire use of the company car belongs to the private lifestyle. And for the private consumption of caviar and champagne there is no tax exemption.

Therefore, it is probably obvious that the tax administration carries out a tax on the provision of a company car for private purposes – both for entrepreneurs and for employees. But what if there were ways to avoid this taxation? And actually, there are. One possibility we would like to present in this post is leasing a company car from private. You will be amazed, because you can even save so much tax that you get more than the original acquisition cost of the company car in the end.

However, before we introduce our design model “privately leased company cars” in detail, we would like to briefly discuss the basics, which usually have to be considered. Thus, the calculation of the private use of an entrepreneur on a company car is regulated by law (§ 8 paragraph 2 EStG; there see also advantageous special rules for electric vehicles).

More precisely, there are even two options with which to determine the taxable private share. One approach requires you to prove exactly how many journeys you made on an operational and private basis and how many kilometres you traveled. For this, however, one must always keep a journey log correctly. However, if this seems too impractical, you can also set a flat-rate calculation according to the so-called 1% rule. However, the gross list price of the vehicle plays a decisive role. The more valuable the company car, the higher the tax will be. In addition, this method is more worthwhile for entrepreneurs who use the company car privately to a large extent. Entrepreneurs who use their company cars less often privately therefore benefit more from the so-called journey log method.

As the title of the article suggests, our design model is about leasing a company car from private. As an entrepreneur, you could therefore use one of the many providers on the leasing market. However, we mean something quite different. Because our model is about leasing a company car from another private person as an entrepreneur. Ideally, this is your own family member. And best of all, this should be a spouse, so that you can also take advantage of the tax advantages of spouse splitting.

In order to better illustrate the practical advantages of our model “privately leased company cars”, we would like to explain it using an example. For this, we assume that Ms. Strom leads a successful, lucrative company. To run her company, Ms. Strom wants to use a company car.

Instead of buying a company car through her company, Ms. Strom decides to lease it from her spouse. Her husband buys the new vehicle from private and has the car dealer show the sales tax; why, we show later.

Suppose the car costs EUR 72,000 net. Mr. Strom makes sure that this is a vehicle model in which a low loss in value can be expected.

Finally, a look at the financing of the purchase of such a company car by Mr. Strom. Both spouses could be interested in the property regime of the joint venture. Because of this, Mr. Strom is entitled to access the common assets in order to acquire the company car.

Mr. Strom now agrees with his wife’s company to provide the car for a monthly fee of EUR 921 net. The remuneration should be customary on the market. However, the transfer should take place partially in time. For example, we could divide 10% private use by Mr. Strom (and thus indirectly by Mrs. Strom) and 90% business use by Mrs. Strom.

For Ms. Strom it is of course advantageous that she can set these costs as operating expenses. In addition, a term of three years is included in the agreement, which can be unilaterally extended by Ms. Strom's company. What is also very important is that Mr and Mrs Strom actually implement this contract, in other words make all payments on time. This also means that you can prove compliance with all other contractual conditions for a representative period. So you should keep at least in the first three months of leasing a common travel log. And of course, this should then prove that partial use works according to the agreements.

Why we distinguish gross and net in our example, we now explain in the following.

For example, Mr. Strom earns twelve times more than EUR 921, i.e. EUR 11,052, annually from the provision of the company car to his wife. Provided that Mr. Strom does not generate any further income subject to VAT, Mr. Strom could be considered a small business owner within the meaning of the Sales Tax Act (§ 19 UStG). As a result, he would normally not levy sales tax on the lease fee. However, there is the possibility of discharging the sales tax treatment as a small business owner, so that Mr. Strom rents out the company car plus 19% of sales tax. Mr. Strom must inform the tax office of the refusal to apply the small business regulations.

Since Ms. Strom is entitled to deduct input tax as an entrepreneur, the calculation of the sales tax when leasing the company car does not constitute a material circumstance for her.

Before the end of the three-year lease period, Ms. Strom extends the lease for three more years. The conditions remain unchanged.

During this time, Mr. Strom also makes depreciations on his car. The period of use of a car, over which the depreciation here takes place quite regularly, is six years. Due to the partial operational use, however, only 90% of the acquisition costs can be taken into account in the depreciation of the company car. Thus, the tax-admissible depreciation corresponds to EUR 10,800 per year.

After deducting the depreciation from the income, a positive amount of EUR 252 is left every year. However, this is just below the exemption limit of EUR 256, which can be achieved annually tax-free with other income. Over the course of the six leasing years, EUR 1,512 come together tax-free in this way.

At the same time, Mr. Strom also receives the remaining EUR 10,800 annually. But he offsets them with the depreciation in the same amount, so that there is no tax. In short, Mr. Strom receives a total amount of EUR 66,312 from his wife’s company over the entire term.

However, if his wife bought the company car for her company, she would pay more (EUR 72,000 net), but at the same time she would lose liquidity. In addition, it would then also have to tax the share of its private use.

After six years, however, the time has also come when Mr. Strom wants to sell the car. Since he initially waived the application of the small business regulation, he would also have to apply sales tax when selling the car. So now is the time when he renounces the application of the derogation and reappears as a small businessman in VAT. Actually, one would then also have to correct the sales tax incurred in recent years, which the company of his wife deducted as input tax, but since a period of more than five years has expired, the entitlement of the tax office is statute-barred. In this way, Mr. Strom can sell his car tax-free.

Since we initially set a high value of the car, we assume that the sale will still bring in EUR 30,000. This proceeds are tax-free because Mr. Strom could sell the car, which is considered an object of everyday use, tax-free even within a one-year speculative period. Otherwise, as with the taxation of cryptocurrencies used to generate income (for example, through lending), one would have to expect a ten-year speculative period.

In short, Mr. Strom has achieved EUR 10.619.40 tax-free income with our design model, which exceeded the gross acquisition costs.

We have completely ignored the positive tax consequences for his wife. We want to outline this only briefly, because otherwise we would also have to model the framework conditions around your company. But that would go too far in this context.

The fact is, however, that Ms. Strom can save up to EUR 66,312 in taxes over a six-year period purely hypothetically through the operating expenses associated with leasing alone. Further tax savings through the elimination of the calculation of private use are added. Depending on the distance between the home and the company and the frequency of the working days Ms. Strom visits her company, even assuming conditions that result in rather low taxation, a realistic saving of the order of a further EUR 35,000 in taxes can be added.

In sum, we also get Ms. Strom a tax advantage of around EUR 100,000 within six years. This amounts to about EUR 17,000 annually.

If we still consider that Mr. Strom does not earn taxable income, then the spouses can also save electricity through the spouse splitting further taxes. But this is only a nice side effect, which can be used in addition to our design model “privately leased company cars”.

Normally we put this section before explaining our design models. Here, however, we have already taken up a few points in our example.

As a lessor, one must be able to consider the income as other income. If, on the other hand, they have a commercial character, they are taxed quite regularly as income from business operations and even cause business tax.

Furthermore, the lease agreement between Mr. and Mrs. Strom is designed in such a way that it withstands an external comparison. He must also meet the condition that the company car can be assigned to Mr. Strom from an economic point of view. If the company car were to be an economic commodity necessary for operation, then economic interdependence would result, triggering a division of operations, which would in turn have fiscal consequences. In order to take this circumstance into account, we have chosen the terms lease duration and extension option in accordance with the requirements of the leasing decree of the Federal Ministry of Finance.

Furthermore, the partial transfer of the vehicle would have to be legally flawlessly defined in the contract. Legal advice on this seems useful, because this point is usually hard to understand for laymen in relation to the legal effect of the contract text.

With regard to VAT, we should be aware that this design depends on the condition of the VAT deduction. For entrepreneurs (for example, medical professionals) who provide supplies or services without VAT, this is therefore irrelevant.

There is a good answer to the question of which corporate forms the design model “privately leased company cars” can be used for. It is suitable both for individual enterprises and for partnerships and corporations.

In addition, we would like to note that we do not regard this design model as an abuse of design according to § 42 AO, because extra-tax reasons also play a role here. Because through this model, Mrs. Strom is able to secure the liquidity of her company. In addition, she pays less than if she bought the company car for her company (only EUR 66,312 instead of EUR 72,000 net).

Nevertheless, we assume that some auditors may be critical of the application of this design model. Therefore, it is particularly important that you have an expert tax consultant at your side, who can explain all connections and thus also dispel all doubts about the admissibility of the design model “business cars from private leases”.

Furthermore, we assume that the legislature will close this loophole over Kurz or Lang. After all, the design model already offers many tax advantages, some of which are considerable, although the scope is much smaller, for example, compared to the clearly illegal trickery in the cum-ex scandal in this model.