Is a car subscription tax-deductible?
Yes – And this is how companies and the self-employed benefit
Car subscription tax-deductible: the most important advantages
A car subscription not only offers flexibility and predictable costs, but also considerable tax advantages. Here is an overview of the most important points:
- Plannable fixed costs: The monthly subscription costs include all running costs such as maintenance, insurance and taxes. This simplifies your bookkeeping and makes the cost calculation transparent.
- Fully deductible for business use: If you use the vehicle exclusively for business purposes, you can claim the monthly costs as business expenses.
- No depreciation necessary: Unlike buying a vehicle, there is no need for complicated depreciation over several years.
- Flexible terms: With short-term contract commitments, you can quickly adjust your fleet requirements.
Car subscription tax deductible – requirements and regulations
The tax deductibility of a car subscription depends on usage and customer status. Here is an overview:
For companies and tradespeople
- Use: If the vehicle is used exclusively for business purposes, the monthly costs can be deducted in full as business expenses.
- Receipts: Monthly invoices and proof of business use (e.g. logbook) are required.
For the self-employed and freelancers
- Mixed use: If the vehicle is used for business and private purposes, the business portion must be proven – either via a logbook or a flat rate.
- VAT advantage: If you are entitled to deduct input tax, you can claim the VAT from the subscription costs, provided the vehicle is used at least 10% for business purposes.
For small businesses
- Direct cost allocation: Small businesses can deduct the net subscription costs as a business expense, but do not benefit from input tax deduction.
For employees
Employer-financed subscription: If the car subscription is provided by the employer, the non-cash benefit must be taxed. Private use is subject to special regulations, e.g. the 1% rule or the reduced 0.25% rule for electric vehicles and the 0.5% rule for hybrid vehicles
Tax treatment of a car subscription in detail
The tax deductibility of a car subscription is clearly regulated. Here are the key aspects:
- Aspect: Regulation
- Prerequisite: The vehicle must be used at least 10 % for business purposes.
- Business expenses: The monthly subscription costs are deductible for business use.
- Input tax deduction: Companies entitled to deduct input tax can deduct VAT
- Mixed use: The professional share must be proven via a logbook.
- No fixed assets: Since the vehicle is not transferred to the owner, depreciation is not applicable.
Special features of electric cars in the car subscription
An electric car on a car subscription brings additional tax advantages. You should be aware of these aspects:
- Regional funding programs: Many federal states offer subsidies for the installation of charging infrastructure such as wallboxes. Find out about current programs.
- 0.25% rule: For private use of electric company cars, only 0.25% of the gross list price is taxed (for a gross list price of up to €60,000).
- Exemption from vehicle tax: Electric vehicles registered by 2030 will continue to be exempt from vehicle tax.
- Low operating costs: Electric cars score points with low maintenance and energy costs, which has a positive effect on the monthly subscription costs.
Conclusion: tax-deductible and efficient car subscription
A car subscription is an attractive option for companies and the self-employed: it offers flexibility, predictable costs and considerable tax advantages. Electric cars on a car subscription are particularly attractive due to additional tax relief and sustainability.
Why MHC Mobility?
- Flexible terms and scalable models
- Including services such as maintenance and insurance
- Transparent cost structure and simple processing
- Attractive options for electric vehicles with all the tax benefits
Take advantage of a car subscription and optimize your mobility costs. Let our experts advise you and find the right model – whether conventional or electric – for your company.
To the vehicle selection
*This guide is for information purposes only and does not constitute tax advice. Despite careful research, no guarantee is given for the accuracy, completeness and up-to-dateness of the information provided. For binding tax advice, please contact a tax consultant or an appropriate specialist.
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