As of July 1, 2022, approximately 756,000 electric vehicles were registered on our German roads. The trend is continuously rising.
It is no rarity for employers to consider providing their employees with either an electric or hybrid vehicle as a company car for both business and private travel.
More often than not the fiscal characteristics are either not evident in advance or are simply not considered at all. The law firm Alexia Huber & Partner Steuerberatungsgesellschaft mbB handles payroll mandates of all kinds and supports its clients even in the tax assessment of special cases, as well as in the processing of electric/hybrid vehicles in the ongoing payroll accounting.
Electric vehicles
Electric vehicles are powered exclusively by an electric motor that is in its entirety or predominantly supplied by mechanical or electrochemical energy storage devices or by zero-emission energy converters.
Calculating the employees’ monetary benefit and the tax treatment depends on when the vehicle was first made available to the employee.
If an employee is provided with an electric vehicle from 2022 onwards for the first time, including for private use, and if the gross list price does not exceed EUR 60.000, the employee’s monetary benefit is calculated based on only one-quarter of the gross list price.
If the gross list price of the vehicle exceeds EUR 60.000, the monetary benefit for private use is still at least halved.
Externally chargeable hybrid vehicles
Hybrid electric vehicles are motor vehicles with a drive system which both consists of at least two different types of energy converters, at least one of which is an electric prime mover and multiple energy storage units, at least one of which can be electrically recharged from an energy source located outside the vehicle.
In the case of a hybrid vehicle, the question also arises yet again as to whether there are any special tax regulations when the vehicle is provided to an employee for his private use.
If a hybrid vehicle is provided to an employee for his private use from 2022 onwards, the monetary benefit is calculated based on half of the gross list price. A further requirement, however, is that the vehicle must have a carbon dioxide emission of no more than 50g/km or a minimum range from using exclusively electric power of at least 60km.
To further promote electromobility, the legislator has created additional benefits and simplifications for the provision of an electric/hybrid vehicle to employees.
Employers can impose a flat-rate wage tax of 25% for providing a charging device to their employees or for subsidies towards the employee’s expenses for purchasing and using a charging device (Section 40 (2) sentence 1 number 6 EStG).
Benefits granted by the employer for the temporary usage of the companies’ charging device for electric or hybrid electric vehicles for private use are also tax-exempt.
As tax consultants in Munich, the tax advisors at Alexia Huber & Partner Steuerberatungsgesellschaft mbB advise their clients on payroll related tax topics and issues.