Private use of company car: (4) Cost ceiling for the flat-rate method

When applying the 1% method, the flat-rate calculated private usage value may be higher than the actual vehicle costs incurred. This can occur, for example, with a fully depreciated vehicle, a cheaply purchased used car, or a leased vehicle.

In this case, the so-called cost ceiling may apply. The flat-rate values are then limited to the actual vehicle costs incurred.

Which costs are considered in the cost ceiling?

The actual vehicle costs include, in particular:

• ongoing vehicle costs such as fuel or charging electricity, insurance, vehicle tax, maintenance and repairs,
• depreciation (AfA) or leasing costs, and
• interest on loans for financing the vehicle.

The actual costs must be proven.

How is the cost ceiling calculated?

If you also use the vehicle for journeys between home and business premises, these journeys must be considered separately in the cost ceiling.

When applying the 1% method, the following amount is generally determined for this:

Gross list price × 0.03 % × distance in kilometres × months of use

The capped private usage value is then generally calculated as follows:

Actual vehicle costs − amount for journeys between home and business premises

The distance allowance can also be deducted as a business expense. For 2025, it is 0.30 Euro per kilometre for the first 20 kilometres and 0.38 Euro from the 21st kilometre.

Example: A company vehicle has a gross list price of 40.000 Euro. The actual vehicle costs amount to 6.000 Euro per year. The vehicle is also used throughout the year for journeys to the business premises 20 km away.

• Private use according to the 1% method: 40.000 Euro × 1 % × 12 months = 4.800 Euro.
• Amount for journeys between home and business premises: 40.000 Euro × 0.03 % × 20 km × 12 months = 2.880 Euro.
• Capped private usage value: 6.000 Euro − 2.880 Euro = 3.120 Euro.

The private usage value is therefore not set at 4.800 Euro, but only at 3.120 Euro.

If the business premises were visited on 200 days, for example, the distance allowance can also be taken into account:

200 days × 20 km × 0.30 Euro = 1.200 Euro.

What applies to electric and hybrid electric vehicles?

If special tax benefits apply to an electric or hybrid electric vehicle, these must also be considered in the cost ceiling.

When determining the relevant total costs, the depreciation is particularly taken into account with the applicable share for the vehicle. If, for example, only a quarter or half of the gross list price is considered for private use, the depreciation relevant for the cost ceiling is also adjusted accordingly.

How is VAT calculated with a cost ceiling?

The cost ceiling for income tax cannot simply be applied to VAT.

If no proper logbook is kept, the private usage share for VAT must be estimated appropriately based on suitable documents. For this purpose, records over a representative period can be used, for example.

If no suitable documents are available, the private usage share is generally set at a minimum of 50 %, unless the circumstances of the individual case suggest otherwise.

For VAT, only the vehicle costs that were eligible for input tax deduction are considered. Costs without VAT are excluded from the assessment basis.

Assessment basis for VAT = vehicle costs subject to input tax × private usage share

VAT of 19 % is generally calculated on this amount.

Important: Journeys between home and business premises are considered business use for VAT purposes and are therefore not attributed to the private usage share.

What applies to a special leasing payment?

A high special leasing payment cannot be used to artificially reduce the cost ceiling in subsequent years.

For the cost ceiling check, a special leasing payment must be spread over the entire term of the leasing contract. This also applies to cash basis accounting.

Example: With a special leasing payment of 30.000 Euro and a term of 36 months, 1/36 of the special payment is generally considered per leasing month for the cost ceiling.

This is different from the deduction of business expenses: In cash basis accounting, a special leasing payment can still be deductible as a business expense in the year of payment under the general conditions. However, for the calculation of the cost ceiling, it is spread over the leasing period.

Where do you enter the cost ceiling in the EÜR 2025 form?

Enter the private usage value determined after the cost ceiling in the EÜR 2025 form under private vehicle use in line 20.

Expenses for journeys between home and business premises are considered in line 72. The deductible distance allowance is entered in line 73.

The VAT on private use – if applicable – is to be considered in line 17.