Company Car in Germany 2026: 1% Rule, Logbook & Depreciation
Diana
Updated on:
A company car (Firmenwagen) can save you €5,000 to €15,000 in taxes per year — if you play by the rules. The biggest decision is whether to use the 1% rule or a logbook (Fahrtenbuch), with extra angles around EV benefits, depreciation, VAT, and how to assign the vehicle to your business assets. Get it wrong and the Finanzamt will recalculate the private use against you at the worst possible rate.
This guide walks you through how to deduct a company car in Germany in 2026 as a freelancer, sole proprietor, or GmbH managing director — including worked examples, EV-specific rules, and whether to lease or buy.
When does a car qualify as a company car?
For the tax office to treat the car as business property (Betriebsvermögen), it all comes down to the share of business use:
Over 50% business use: mandatory business asset — the car has to go on the books.
10% to 50% business use: optional business asset — you can choose.
Under 10% business use: personal asset — no company car possible. You can still deduct €0.30 per business kilometer driven.
Business use covers anything clearly serving the business: client meetings, deliveries, trips to the bank, tax advisor, or government offices, runs to trade shows or training. Commuting between home and your main place of business also counts as business — but it's taxed separately (more below).
Sort car receipts into your books automatically
Norman recognizes fuel receipts, garage invoices, insurance payments, and lease bills automatically and assigns them to the right tax category — including VAT recovery and depreciation across the six-year useful life.
Acquisition cost: depreciation over 6 years
A company car isn't fully written off in the year of purchase — it's depreciated over its useful life. The official depreciation table sets the useful life of a passenger car at 6 years, giving a straight-line depreciation of about 16.67% per year.
Example: you buy a used BMW for €30,000 net. You deduct €5,000 per year as depreciation (AfA). In the year of purchase and the final year, depreciation is prorated by month — buy in July and you only depreciate 6 months in year one.
For used cars, you can use a shorter remaining useful life if the car is already a few years old. Rule of thumb: remaining life = 8 years minus age, but at least 2-3 years. Very old used cars (7+ years) are often depreciated over 2 or 3 years.
VAT recovery
If you're VAT-registered, you reclaim the 19% VAT from the purchase price — immediately in the month of purchase, not spread over depreciation. On €30,000 net, that's €5,700 in input VAT, refunded with your next VAT return.
Heads up: small businesses (Kleinunternehmer) under §19 UStG can't reclaim VAT. For them, depreciation is calculated on the gross price.
Taxing private use: 1% rule or logbook
If you also use the company car privately — and almost everyone does — you have to tax that benefit-in-kind. The Finanzamt accepts two methods:
Method 1: the 1% rule
Each month you tax 1% of the German gross list price (Bruttolistenpreis, BLP) at first registration — not the purchase price. Even for a five-year-old used car, the original list price applies. Round down to the nearest €100.
You also tax 0.03% of the BLP per kilometer for the one-way distance between home and your main place of business — also per month.
Example: BMW 3 Series, BLP €50,000, 15 km from home to office.
Private use: 1% × €50,000 = €500 per month = €6,000 per year
Home-office commute: 0.03% × €50,000 × 15 km = €225 per month = €2,700 per year
Total benefit-in-kind: €8,700 per year
That €8,700 increases your taxable profit (or, for a GmbH managing director, your gross salary). The commuter allowance partly offsets it.
Method 2: the logbook
With a properly kept logbook, you only tax the actual private share of total costs. This usually pays off when private use is low or the BLP is high.
For the logbook to hold up:
It must be kept contemporaneously and without gaps — no reconstructing it later.
Each entry needs date, odometer reading at start and end, destination, purpose, and the business contact.
It must be tamper-evident — Excel doesn't qualify, because entries can be changed retroactively. Apps with audit-proof storage are fine.
Example: same BMW, BLP €50,000, total annual costs €12,000 (depreciation + fuel + insurance + repairs). Logbook shows 25% private use. Benefit-in-kind: 25% × €12,000 = €3,000 — instead of €8,700 under the 1% rule.
You commit to one method per car per calendar year. No mid-year switching.
EVs: the 0.25% rule
For pure electric vehicles Germany has had a massively reduced benefit-in-kind since 2020. For EVs purchased after 31 December 2023:
BLP up to €70,000: 0.25% rule (quarter-rate)
BLP over €70,000: 0.5% rule (half-rate)
Example: Tesla Model 3, BLP €45,000, 15 km commute.
Private use: 0.25% × €45,000 = €112.50 per month = €1,350 per year
Commute: 0.03% × 25% × €45,000 × 15 km = €50.63 per month = €607.56 per year
Total: about €1,958 per year — versus €7,830 for a combustion car at the same list price.
Plug-in hybrids get the 0.5% rule if they meet the minimum electric range (80 km for vehicles purchased from 2025 onward) or emit under 50 g CO₂/km. Requirements tighten further from 2030.
Running costs: everything else you can deduct
Once the car is on the books as a business asset, all running costs are business expenses:
Fuel or electricity (including home charging — flat rate or itemized)
Insurance (liability, comprehensive)
Vehicle tax (Kfz-Steuer)
Garage, servicing, MOT (TÜV/HU)
Tires and seasonal changes
Parking, tolls, motorway vignettes
Lease payments and any upfront leasing payment
Cleaning and detailing
One exception: traffic fines are not deductible (§4 Abs. 5 Nr. 8 EStG). Got a parking ticket on the way to a client? That's on you.
Using your private car for business: €0.30 per km
If your car stays a personal asset but you make occasional business trips, you can deduct €0.30 per kilometer actually driven as a business expense — no receipt required, no complicated math. People who occasionally drive long client routes but otherwise use the car privately often come out ahead with this versus the 1% rule. We cover this in detail in our guide to travel expenses for the self-employed.
Buy, lease, or finance?
Tax-wise the differences matter less than people often claim — but there are some:
Buying: acquisition cost over 6 years of depreciation, full VAT recovery upfront. If you sell later, the proceeds count as business income.
Leasing: lease payments are deductible in full as they're paid, with VAT recovery on each. An upfront lease payment is usually fully deductible in year one for cash-basis accounting; under accrual accounting, it's spread over the lease term.
Financing: like buying, but the interest is also deductible.
Cash flow often matters more than tax: with leasing you don't have to put €30,000 on the table at once. If you want to play through the actual numbers, the Norman tax calculator handles it.
GmbH and UG: special rules
For corporations the car belongs to the company, not the managing director. Private use by the director is treated like an employee benefit — taxed as part of payroll. The company withholds wage tax and (depending on the director's status) social contributions.
Private use without a clear arrangement in the employment contract is often reclassified by the Finanzamt as a hidden profit distribution (verdeckte Gewinnausschüttung) — and that's expensive. More on this in our GmbH bookkeeping overview.
Common mistakes
Using the 1% rule when private use is well under 50%: usually a logbook would save you money.
Wrong gross list price: it's the list price at first registration including factory options — not what you paid, not the current market value.
Improper logbook: Excel without lock, gaps, missing purposes — the Finanzamt rejects it and reverts to the 1% rule retroactively.
Not declaring private use at all: claiming 100% business use without watertight proof triggers automatic application of the 1% rule.
Reclaiming VAT as a Kleinunternehmer: §19 UStG businesses can't.
Bottom line
The company car is still one of the most powerful tax-saving tools for the self-employed and managing directors in Germany — provided private use is handled cleanly. For an expensive combustion car with a high BLP and modest private mileage, a logbook almost always wins. For cheaper cars and heavy private use, the 1% rule is fine. With an EV under €70,000 BLP, the 0.25% rule is currently the best deal on wheels.