Company car taxation: No reduction in benefits due to parking space costs borne by the employee

If an employer provides an employee with a company car, the possibility of private use of the vehicle leads to an enrichment of the employee and thus to an inflow of wages. The resulting non-cash benefit is to be assessed either according to the so-called 1% rule (plus 0.03% for commuting between home and the primary place of work, if applicable) or according to the logbook method. In its decision of September 9, 2025 (case no. VI R 7/23), the Federal Fiscal Court (BFH) dealt with the question of whether a non-monetary benefit from the use of a company car should be reduced by the parking costs borne by the employee.

In the case in dispute, the employer determined the non-monetary benefit associated with the private use of company cars for its employees by applying the 1% rule. It also offered its employees the option of renting a parking space near their place of work at a monthly cost of EUR 30 at their own expense and took these monthly rental payments into account as a reduction in the benefit; the company's “company car policy” did not provide for reimbursement of these costs. During an external income tax audit, the tax office rejected this approach, as the parking space rental was not part of the total cost of the vehicle. The Cologne Fiscal Court, on the other hand, ruled in favor of the employer, as the operation of a company car requires parking facilities as an essential part of vehicle use.

The BFH overturned the first-instance decision and dismissed the employer's claim as unfounded. In its opinion, only those expenses incurred and borne by the employee reduce the taxable benefit of private use of a company car which, if (hypothetically) borne by the employer, would be part of this benefit and thus covered by the 1% rule. These include one-off payments for a specific period, acquisition costs for the company car that are covered in full or in part, and usage-based expenses for fuel and lubricants.

According to previous BFH rulings, costs that depend solely on the employee's decision to use the vehicle to travel to a specific private destination, such as ferry, toll, or vignette costs for private trips, are not covered by this provision (including the decision of January 23, 2025 (case no. III R 33/24)). Rather, the assumption of such costs by the employer would constitute an independent monetary benefit. The decision to park the vehicle close to the workplace in a paid parking space or free of charge is equally at the discretion of the employee. Consequently, the legal principles developed by the Federal Fiscal Court to date can also be applied to parking space and garage costs; the provision of a parking space or garage free of charge constitutes a benefit that is to be assessed independently of the 1% rule or the logbook method. Parking space costs borne by the employee therefore do not reduce the non-monetary benefit derived from the provision of a motor vehicle.
 

Notice: 

According to the BFH's statements, a different assessment can only be made if the use of the garage or parking space is based solely on the employer's predominant interest in its own business or if the employer has agreed to bear the costs in an employment contract. Accordingly, the BFH decision of June 7, 2002 (case no. VI R 145/99) does not contradict the current decision. In that case, there was an obligation under the employment contract to park the company vehicle in a garage overnight; in this respect, there was no monetary benefit.