Deduction for business-related expenses when travelling on business in a private car

Anyone who uses their private car for business travel can claim the costs incurred for tax purposes. But does this also apply if the employer has provided a company car and the employee nevertheless uses their private car? The Federal Fiscal Court (BFH) recently had to rule on this matter in case VI R 30/24.

In the case in question, the employer provided the claimant with a company car, which both he and his wife were permitted to use for private purposes, provided that this did not conflict with business requirements. In the year in question, the claimant used his private vehicle for three business trips, as his wife was using the company car during that period. The claimant claimed the expenses incurred in this regard as income-related expenses in his income tax return.

The tax office refused to allow the deduction of these costs; following an unsuccessful appeal, the claimant brought an action before the tax court. The tax court initially ruled in his favour. However, on appeal, the Federal Fiscal Court (BFH) disallowed the deduction of the income-related expenses. Whilst it was undisputed that the journeys were work-related, the expenses were deemed unreasonable and therefore not eligible for tax relief.

In principle, an employee who uses their private vehicle for business travel outside their primary place of work may claim the costs in accordance with Section 9(1), sentence 3, no. 4a of the Income Tax Act (EStG). In the case of a car, either a flat-rate mileage allowance of 30 cents per kilometre travelled may be applied, or the actual vehicle costs may be taken into account. For the latter method, the total annual costs and the total mileage must be determined in order to calculate an individual mileage rate. Although many taxpayers opt for a flat-rate of 30 cents per kilometre for practical reasons, the mileage rate calculated from the total costs is often higher and results in a larger tax refund.

However, the Federal Fiscal Court (BFH) deemed the costs in this specific case to be unreasonable, as they were clearly motivated by private reasons. The claimant used his private car so that his wife could use the company car. As his employer reimbursed him for the fuel costs of the company car, he would not have incurred any out-of-pocket expenses had he used it for the business trip. Under normal circumstances, the claimant would therefore have taken the company car. The decision to use the private car was consequently based on private reasons, which is why the expenses could not be taken into account for tax relief.

The ruling makes it clear that travel expenses for business trips are not always tax-deductible – particularly where a company car is available. The situation is likely to be assessed differently if the employee is obliged to use their private vehicle, for example because the company car is out of service due to repairs or cannot be used for other objective reasons. In such a case, in the author’s view, the expenses would not be unreasonable and could be claimed for tax purposes. Taxpayers should therefore carefully assess, on a case-by-case basis, whether the use of a private vehicle for business travel is to be regarded as reasonable in the specific circumstances.