Managing Directors of their own GmbH often buy a company car, which they also like to use privately. This has the advantage that both the acquisition costs (via depreciation) and the costs incurred during use reduce the taxable profit as operating expenses. However, this also means that private use is taxed in kind. The tax is determined either by the so-called 1% rule or by the evaluation of a journey log. It should also be borne in mind that when the company car is sold, there is also a tax on any proceeds that may exceed the book value. Therefore the question: can you drive a company car without private use?

As advantageous as the private use of a company car may nevertheless be, the more advantageous alternative is the rental of a private car to your own GmbH. Of course, you have to tax the rental or lease fee for the vehicle. For this purpose, the percentage business use is determined over a period of three months and can then set the depreciation on the acquisition costs privately according to this ratio. Instead of a travel logbook, a simple Excel table is sufficient for this. After the end of the depreciation period, half of the purchase costs of the car have often been saved on income tax. If you get for the sale of the car then at least half of the acquisition costs, then the purchase was purely mathematically even free! And if you sell a car at that time, in which more than half of its original acquisition costs remained in value, then the resulting profit is even tax-free.

Drive company cars without 1% regulation & without logbook!

In the 10-minute video we explain all the relevant points of this design model.

Enter now and save taxes:

Legal and other aspects of private use of a company car

1.1. Material reference when using a company car

The private use of a company vehicle by an employee of a GmbH or another company leads to taxation because it constitutes a tax reference in kind. Of course, this also applies to a managing director of a GmbH. After all, from the point of view of employment law, this is only an employee of the GmbH. Because the GmbH is considered a legal person with its own rights and obligations. And one of those rights is hiring a director. It does not matter whether you are at the same time even the only shareholder of the GmbH, which actually happens quite often.

In order to make this situation tax more advantageous, we have developed the model described below. Therefore, we focus on the possibility of such a GmbH Managing Director, who is also the only shareholder, can drive a company car without private use.

1.2. Legal framework for monetary benefit

Since the provision of the company car for private use as a reference in kind represents a monetary advantage in the salary of the shareholder, the taxation via the payroll tax is to be paid as withholding tax (§ 38 EStG). Further taxes must also be made with the social insurance of the GmbH Managing Director. The tax and social security are calculated either by means of the so-called 1% rule or a comparison of the actual relationship between business and private use of the car. If the latter approach is chosen, a journey log must always be kept (§ 6 EStG).

Tax advantages and disadvantages of a company car

In any case, the avoidance of taxation of the private use of a company car by a GmbH managing director is a frequently discussed concern of our clients. Many would like to take advantage of the advantages that a GmbH can claim for itself when purchasing and using a company car. Finally, both the operating costs and the depreciation of the acquisition costs should be recognised in a profit-reducing manner. And the use of the company car for private purposes of the GmbH Managing Director is also quite advantageous, since the operating costs are incurred on behalf of the company. However, depending on the list price of the vehicle, it is very likely that sometimes considerable taxes will be levied on both wage tax and social security.

In addition, if the company car is sold by the GmbH, a tax on a possible profit may arise. This refers to a profit if the sales proceeds are above the current book value. This is therefore quite often the case for vehicles with high values. And this in turn is quite common for vehicles that have high acquisition costs. In short, the more valuable a car that a GmbH acquires as a company car, the higher taxes and other taxes are.

Company cars without private use – our model

3.1. Company cars – rented from private

This brings us to our model, with which you receive the tax advantages of a company car on the one hand, but at the same time avoid the consequences of taxes and social taxes in private use. The highlight here is that we do without a company car altogether. Of course, walking is healthier than driving, but a complete renunciation of the use of a car is by no means in our intention. But it must not be a company car. Or, in other words, the vehicle, instead of in the operating assets of the GmbH, is better off in the private assets of the GmbH shareholder.

The following hypothesis: If you privately buy an upscale new car, then you can rent it to your GmbH so that it can use it as a company car. At the same time, your car is of course still available to you without restriction for private purposes. Although the lease of the car is to be reimbursed with a rent or a lease fee, which contributes to the income tax as income from renting and leasing. However, the depreciation of the acquisition costs of the car is also possible. The advantage on the part of the GmbH here is that the rent is tax deductible as an operating expense.

3.2 Initial requirements, easily met

All you have to consider is to narrow down the relationship between private and operational use. This requires neither a blanket method, such as the 1% rule, nor the constant keeping of a logbook. Rather, it is sufficient to create a list of private and operational mileage over a period of three months. For this, an Excel table is completely sufficient. This allows the financial administration to be given information on the percentage with which the depreciation of the car is to be carried out. The higher the operational use in relation to the private, the higher the depreciation.

3.3 Sale of the vehicle – with profit?

Let's finish the idea, then we come to the time when the sale of the car is pending. To simplify matters, we assume that after the expiry of the depreciation period of six years typical for passenger cars, half of the acquisition costs will be reimbursed by the Treasury through the depreciation. In other words, the state paid you half the car. Now they can try to get the other half by selling the car. If you do everything right, this private income is even tax-free. As a reminder: if the GmbH would sell the company car at this point, on the other hand, a tax would be expected. So you have finally acquired the car without your own effort or, depending on the point of view, financed the purchase of the successor.

In fact, with our model, even a private profit can be realized. Because if you buy a car that shows a loss in value of less than 50% of the acquisition cost over the next six years, then you even make a tax-free profit on a clever sale.

4th company car without private use: Conclusion

Whether sports car, SUV or sedan (or should it soon be an electric car?), our model opens up the possibility for GmbH managing directors to drive a company car without taxes on private use, but at the same time to use all tax advantages of a company car in the operating assets of a GmbH. The financing of the acquisition costs via the annual depreciation and the sale of the car is quite feasible. Ideally, even a tax-free profit can be achieved by selling the car. Of course, the profit can then be used to acquire an even more valuable successor, but this depends above all on how small the loss in value of the vehicle is. In general, there is a tendency that cars with high acquisition costs have a lower loss in value than cheap cars. However, there are certain differences in detail. Therefore, it makes sense to inform yourself about this point before buying a car.