1 % rule (company car)

How does the 1 % rule work?

If a business car (business use above 50 %) is also used privately, the tax office assumes a flat 1 % of the domestic gross list price per month as the private share – including factory-fitted extras, rounded down to full €100. For commuting between home and the primary workplace, an additional 0.03 % of the list price per kilometre of distance and month is added. Anyone who demonstrably commutes on fewer than 15 days per month can instead apply 0.002 % per kilometre per actual trip – real money for frequent travellers and remote workers.

Electric and hybrid vehicles: 0.25 % and 0.5 %

For fully electric vehicles, only a quarter of the gross list price is applied – effectively 0.25 % per month. The list-price cap has been raised repeatedly: €70,000 for acquisitions from 2024, €100,000 for acquisitions from July 2025. Above the cap, half the base (0.5 %) still applies. Plug-in hybrids qualify for 0.5 % if they emit no more than 50 g CO₂/km or offer a sufficient electric range (80 km for acquisitions from 2025). An electric company car with a €60,000 list price thus costs the managing director only €150 of taxable benefit per month – the combustion car next to it four times as much.

When is the logbook the better choice?

With the logbook method, the private share is calculated from the vehicle's actual total costs and the documented private-use percentage. This typically pays off in four situations:

• Low private use – below roughly 20 % private mileage, the flat rate almost always overcharges.
• High list price but low running costs – for instance a fully depreciated or cheaply bought used vehicle.
• Short holding periods or low annual mileage, where the 1 % flat rate exceeds real costs.
• A second business car that is driven almost exclusively for business.

VAT on the private share

For VAT purposes, private use is a deemed supply. Under the 1 % method, VAT is calculated on 80 % of the flat value – 20 % is treated as a lump-sum allowance for costs without input VAT, such as motor insurance. Important: the income-tax reliefs for electric vehicles (0.25 %/0.5 %) apply only to income and payroll tax – VAT continues to be calculated on the full 1 % value. Applying the reduced value here is a classic audit finding.