Special leasing payments and taxes in Germany

Through a federal-and-states decree, which was recently made public by the Tax Authority Hamburg, a tax-saving model for profit determinations under art. 4 sec. 3 EStG (German Income Tax Act) connected with leased company cars is to be prevented. Until now, high special leasing payments for leasing contracts with a term of less than five years have resulted in immediately deductible operating expenses in full. The later, very small leasing rates then resulted in small expenses. ​

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When applying the 1% rule for determining the private use share, the cost-capping principle must be observed: strictly, only the actual costs incurred in the relevant year are relevant to the maximum amount. From the point of view of the tax administration, however, this represents a tax-saving model, since the private use share in the following years is deliberately limited by the special leasing payment in the first year.
From now on, the procedure is as follows: for the cost-capping rule, the total costs of a motor vehicle are to be determined. Expenses paid in advance for several years must also be considered. These expenses are to be spread over the respective period of use. This now includes the special leasing payment.

Extra sustenance costs (allowances / reimbursements for additional subsistence expenses) in Germany