VAT on benefits in kind for company cars eligible for input tax deduction

This private use represents a barter-like transaction and is subject to VAT, provided that the employer was able to deduct input tax from the purchase or lease of the vehicle. This also applies in principle to all-electric vehicles with a CO₂ emission value of 0 g/km.

Tax base

The market value of use (e.g. the leasing rate or the comparable rental value, also known as 'arm's length value') should be used as the tax base. Currently, the tax authority accepts taxation based on the benefit-in-kind value determined for income tax assessment purposes (Sections 672 and 682 VAT Guidelines (UStR). In this context, the benefit-in-kind value is to be regarded as a gross value, including VAT.

As the benefit-in-kind value for electric cars is currently zero, this does not result in any VAT liability. However, it should be noted that there has been no case law on this to date, meaning a residual risk remains that VAT could be assessed based on actual costs or a 'notional' benefit in kind during an audit.

Tax rate

The standard rate of 20% applies.

Time of supply

Private use must be recorded and taxed on a monthly basis where applicable.