Bundesfinanzhof rules on private car tax deductions

The German Federal Fiscal Court (Bundesfinanzhof) has issued a landmark ruling regarding the tax deductibility of private vehicle expenses during business trips when a company car is available.

The case involved an employee who chose to use his private sports car for three business trips totaling 1,648 kilometers, rather than using the company-provided van. The employee cited family necessity, noting the company van was required at home for his wife to transport their minor children. While the employee attempted to claim 3,758 euros in professional travel costs, the tax office rejected the claim.

Although a lower financial court initially ruled in favor of the employee, the Bundesfinanzhof overturned the decision. The court determined that because a company vehicle was available for the business purpose, the decision to use a private vehicle was a personal choice rather than a professional necessity, thereby disqualifying the costs from being tax-deductible.