For Christian Lindner, it resembles a class struggle: “Left framing” is when coalition partners talk about a company car privilege, said the finance minister recently. A manipulative choice of words that is intended to give people the feeling that something is not right. In fact, the Greens in particular have a stomach ache with the flat-rate taxation of company cars, which they consider to be gas guzzlers in many cases. Lindner, on the other hand, cannot see any privilege, he speaks of a tax simplification.
So far, so well known. But now, as a compromise, the Greens have proposed linking flat-rate taxation more closely to the vehicle’s CO2 emissions – and thus generating additional income with which a successor to the 9-euro ticket could be paid for, for example. The dispute within the coalition over the company car has flared up again since then. So much so that the Ministry of Economics emphasizes that there is no “deal” between the responsible ministers that the controversial regulation will remain in place. The “Handelsblatt” had previously reported on such an agreement between Economics Minister Robert Habeck (Greens), Finance Minister Lindner and Transport Minister Volker Wissing (both FDP). What exactly is being argued about:
If you also use your company car privately, you have what is known as a pecuniary advantage, which must be taxed. If you don’t want to keep a logbook, you can use the so-called one percent rule. One percent of the gross list price of the vehicle is used for each month. If you drive a company car with a list price of 50,000 euros, the monetary benefit is 500 euros per month. You then pay taxes on this amount.
Electric cars are taxed better: For pure electric vehicles that do not cost more than 60,000 euros, only 0.25 percent of the gross list price has to be applied. For more expensive electric cars and plug-in hybrids it is 0.5 percent. Companies can also deduct the purchase of company cars from their taxes.
The Federal Environment Agency sees the regulation as an environmentally harmful subsidy. According to an analysis, the actual monetary benefit is often higher than one percent. Especially since the refueling is often paid for by the employer. The tax breaks for company cars also reduce the incentive to use public transport, according to the Federal Environment Agency. In relation to 2018 and the regulation in force at the time, there was a subsidy of at least 3.1 billion euros. The Greens would prefer to use this money to finance a cheap local transport ticket.
“Wirtschaftswise” Veronika Grimm is also in favor of abolishing flat-rate taxation. “That would give the state additional funds of around three billion euros,” she told Bayerischer Rundfunk. This would allow the state to lower fares and make local transport more attractive. The ecological Verkehrsclub Deutschland also considers flat-rate taxation to be outdated and speaks of an enormous tax privilege. “It’s mainly the higher earners who benefit from this. A company car is much cheaper than buying it privately,” says expert Michael Müller-Görnert.
Finance Minister Lindner refers to studies and case law according to which flat-rate taxation does not result in any tax advantages. It is primarily a tax simplification that saves users from having to keep a logbook. If the regulation were abolished, there would be no significant additional revenue for the state.
The leader of the Greens in the Bundestag, Katharina Dröge, has proposed linking tax treatment to emissions. This could provide incentives for climate protection and energy saving. “That means: The more environmentally friendly a company car is, the better it is for companies and employees,” she told the editorial network Germany. Lindner reacted promptly and emphasized: The climate impact is already being taken into account, because hybrid and electric cars are being promoted. This would mean that climate-friendly vehicles would enter the fleet as new cars, which would later become cheaper used cars. So far, the SPD has been remarkably reticent in the dispute between the remaining coalition partners.
Supporters of the previous regulation point to the great importance for the German automotive industry. Company and service cars are largely produced in Germany, says industry expert Ferdinand Dudenhöffer. This is associated with considerable added value for suppliers and car manufacturers in Germany. This applies in particular to the middle class, upper middle class and the upper class.
According to the Association of the Automotive Industry VDA, company cars are very important for German manufacturers. The German market share for company cars was 82 percent last year, compared to just 68 percent for the overall market. Slightly more than every third newly registered passenger car last year was a company car. The following applies: the more expensive a car, the higher the proportion of company cars.
A part of it are the big sledges of the board members. Company cars, which – fuel card included – are more likely to be understood as salary components. However, according to the VDA, more than 48 percent of the newly registered company cars were also micro and small cars, mini-vans and vehicles from the compact and medium-sized classes. This also includes, for example, cars for the nursing service or the field worker.
In 2021, the e-share in company cars was above average at 29 percent compared to the overall market (26 percent). “Because it is attractive for companies and employees to order new vehicles on a regular basis, they go on the market a few years later as used vehicles,” says VDA President Hildegard Müller. “Especially on the way to electromobility, it would be a big mistake to turn on the company car tax.”
