Using electric company cars offers not only ecological benefits but also significant tax savings. In this post, you will learn how you can benefit from the 0.25% rule and the tax-free installation of charging stations. Discover how your company can not only protect the environment through smart investments in electromobility but also achieve significant financial advantages. All tax benefits mentioned in this article apply specifically to German tax regulations.
Overview of Tax Benefits for Electric and Hybrid Vehicles
The following table provides a summary of the key tax regulations and benefits for electric and hybrid vehicles. This overview offers a quick insight into the various tax incentives and regulations. Detailed information on each point can be found later in the article.
| Description | Regulation | Vehicle Type | Amount |
|---|---|---|---|
| Provision and Installation of Charging Stations | § 3 No. 46 EStG | Electric and Hybrid Vehicles | Tax-free |
| Charging at the Workplace | § 3 No. 46 EStG | Electric and Hybrid Vehicles | Tax-free |
| Monthly Flat Rate for Home Charging | Flat Rate Reimbursement | Electric Vehicles | 70 EUR (without additional charging option at or from the company) |
| Monthly Flat Rate for Home Charging | Flat Rate Reimbursement | Hybrid Vehicles | 35 EUR (without additional charging option at or from the company) |
| Reimbursement of Charging Costs by kWh-accurate Billing | kWh-accurate Reimbursement | Electric and Hybrid Vehicles | Variable |
| Monetary Benefit for Providing an Electric Company Car up to 70,000 EUR Gross List Price | 0.25% Rule | Electric Vehicles | 0.25% of the list price |
| Monetary Benefit for Providing a Hybrid Company Car | 0.5% Rule | Hybrid Vehicles | 0.5% of the list price |
| Special Depreciation for Newly Registered Fully Electric Vehicles | Special Depreciation | Electric Vehicles | Variable |
Tax-Free Provision of Charging Stations
A major advantage for employers is the ability to provide their employees with a charging station (Wallbox) and cover the installation costs without it being subject to income tax. This is possible according to § 3 No. 46 EStG . However, if the Wallbox becomes the property of the employee, it becomes subject to income tax and can be taxed at a flat rate of 25%.
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Tax-Free Charging at the Workplace
The free or discounted charging of electric or hybrid vehicles at the employer’s premises is tax-free if the employer provides this benefit in addition to the employee’s regular salary. This applies to both private and company vehicles.
The tax exemption is not limited to a maximum amount or the number of eligible vehicles and is valid until the end of 2030. It also applies to temporary workers and has been extended until the end of 2030. According to § 4 Abs. 2 Nr. 4 Satz 1 LStDV , the employer does not need to record the tax-free benefits in the employee’s payroll account for simplification purposes. This also includes the tax-free benefits according to § 3 No. 46 EStG.
Reimbursement of Expenses for Company Cars
The tax exemption according to § 3 No. 46 EStG does not apply if the employee charges the company car at home or at third-party locations.
However, the reimbursement of privately incurred electricity costs can still remain tax-free, as it is considered a tax-free reimbursement of expenses for the company car. The reimbursement of expenses for company cars offers employees an attractive way to get privately incurred costs for the company car used for business purposes reimbursed tax-free. This includes the reimbursement of electricity costs when the vehicle is charged at home or at third-party locations. This regulation makes it easier for employees to minimize the costs of operating their company car while benefiting from tax advantages. The reimbursement of charging costs for a company car can be tax-free in several ways:
Flat Rate Reimbursement for Privately Charged Electric and Hybrid Company Cars
If an employee charges their privately used electric company car at home, they would normally need to document the costs accurately, ideally with a separate electricity meter. However, since this would incur additional costs – for example, a separate calibrated meter – and administrative effort, the tax authorities allow monthly flat rates for tax- and contribution-free reimbursement of expenses for simplification purposes. This regulation was introduced by a letter from the Federal Ministry of Finance in Germany on September 29, 2020.
Since 2021, increased flat rates apply until the end of 2030:
Reimbursement flat rate for electric company cars
- Monthly flat rate with additional charging option at the employer’s premises (A charging card is also considered a charging option and reduces the flat rate):
- 30 EUR per month for electric vehicles
- 15 EUR per month for hybrid electric vehicles
- Monthly flat rate without additional charging option at the employer’s premises:
- 70 EUR per month for electric vehicles
- 35 EUR per month for hybrid electric vehicles
If the costs for charging electricity incurred by the employee during a month exceed the fixed flat rate, the employer can reimburse the actual costs incurred instead of the flat rate, provided these are substantiated by receipts. This reimbursement remains tax-free.
Reimbursement of Charging Costs as Expense Reimbursement through kWh-Accurate Recording
A precise method for reimbursing charging costs for company cars is kWh-accurate billing. Here, the electricity consumption is accurately recorded either by a separate electricity meter or an appropriate charging station (Wallbox).
- Manual kWh-Accurate Billing: The employee records the electricity consumption themselves, for example, by regularly reading an intermediate meter before or in the Wallbox, and submits the collected data to the employer for reimbursement. This method accurately reflects the actual costs but requires precise documentation and possibly additional technical equipment .
- Automatic kWh-Accurate Billing: Alternatively, automatic recording and billing can be used. Here, a legally compliant Wallbox with a connection to a billing backend is installed. The employee authenticates themselves using RFID, and the charging processes are automatically transmitted to the company and billed. This method offers a transparent and efficient solution that simplifies billing for both employers and employees. For more information, read our article on the topic: Charging and Billing Company Cars at Home .
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Further Information on Taxes and Electric Company Cars
Increase of the Gross List Price for the 0.25% Rule
Another tax advantage is the monetary benefit for providing an electric company car, which is 0.25% of the gross list price, up to a list price of 70,000 EUR (since January 1, 2024).
The increase of the gross list price to 95,000 EUR for the 0.25% rule in the taxation of company cars for electric vehicles is planned but not yet finally decided. The German Federal Parliament still needs to approve the proposal. If this happens, the new regulation will come into effect retroactively from July 1, 2024. The proposal to increase the gross list price to 95,000 EUR for the 0.25% rule in the taxation of company cars for electric vehicles comes from the federal government. This proposal is part of the so-called “Growth Opportunities Act”, which aims to improve the framework conditions for more growth, investments, and innovations.
Logbook as an Alternative to the 0.25% Rule
When it comes to the taxation of electric company cars, employees have the choice between the 0.25% rule and keeping a logbook. Alternatively, a logbook can be kept to accurately document the actual business and private trips. This method can be advantageous if the proportion of private use is low, as it allows for an exact accounting of the actual usage costs and thus potentially leads to a lower tax burden. However, the logbook method also means significantly higher effort, as every trip must be precisely documented. Employees can therefore choose the method that best suits their individual situation.
Taxation of Hybrid Company Cars
Hybrid company cars offer a combination of electric and combustion engines, which also brings tax advantages. However, the taxation of hybrid company cars differs from the taxation of pure electric vehicles.
For plug-in hybrids, the 0.5% rule generally applies. This means that 0.5% of the gross list price of the vehicle must be taxed monthly as a monetary benefit. However, this rule only applies under certain conditions:
- Electric Minimum Range: The plug-in hybrid must have a purely electric minimum range of at least 60 kilometers. From 2025, this requirement will be increased to 80 kilometers.
- CO₂ Emissions: Alternatively, the CO₂ emissions of the vehicle must not exceed 50 grams per kilometer. The monetary benefit for the private use of a hybrid company car can be determined either as a flat rate, by keeping a logbook, or by kWh-accurate billing, similar to electric company cars.
Budget 2025: Mini-Subsidy for Electric Cars Approved
The federal cabinet has approved the budget for 2025, which includes a moderate subsidy for electric cars. A special depreciation for newly registered fully electric and comparable zero-emission vehicles will be introduced, which will apply retroactively from July 1, 2024, and run until the end of 2028. This measure aims to make the acquisition of such vehicles more attractive.
Charging Private Electric Cars at the Company
More and more employers are offering their employees the opportunity to charge their electric cars during working hours. This is not only practical but also tax-free according to § 3 No. 46 EStG. Although companies are not required to provide charging facilities, both sides benefit if they do. Employees can charge their vehicles, whether private electric cars or company cars, during working hours and often benefit from reduced electricity prices. Employers, in turn, can fulfill their ecological responsibilities and strengthen their bond with employees. Additionally, offering charging stations for external visitors can increase the company’s attractiveness.
Conclusion: Tax Benefits of Electric Company Cars
Electric company cars offer significant tax savings. Through the 0.25% rule, tax-free installation of charging stations, and the possibility of tax-free charging at the workplace, both companies and their employees can benefit. The various methods for reimbursing charging costs, whether flat rate or kWh-accurate, provide flexible and attractive solutions to minimize operating costs. Additionally, the planned increase in the gross list price for the 0.25% rule opens up further financial incentives.
