Company cars: Requirements for a reduction in benefits under the 1% rule

Oct 30, 2025

The Federal Finance Court (BFH) had to decide whether an employee who receives a monetary benefit from the use of a company car, which he has settled using the 1% rule, is entitled to a reduction in this monetary benefit if he bears the costs of parking, ferry and tolls incurred for private purposes. Furthermore, the employee had purchased a bicycle rack used exclusively for private purposes and wanted to claim depreciation for wear and tear (AfA) as a reduction.

Both the tax office and the tax court of first instance denied the employee the tax reduction and thus the reduction in income from employment. The Federal Fiscal Court also concurred with this assessment, as the reimbursement of such costs by the employer constituted an additional monetary benefit to be assessed separately. Conversely, this means that such costs incurred exclusively for private purposes cannot constitute a reduction in benefits, even if they were incurred with and for the vehicle used for business purposes.

Source: BFH, judgment of 18 June 2024 - Ref. VIII R 32/20