Car subscription tax deduction: How it works

At a glance

In Germany, a car subscription (Auto-Abo) offers flexibility—and potential tax deductions, especially if you use the vehicle for work. This article explains how to make your car subscription tax-deductible, which expenses apply, and how to approach the process.

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Is it possible to deduct a car subscription on your taxes?

Yes—employees can deduct an Auto-Abo if they use it at least 10% for professional purposes. In that case, the monthly subscription fees qualify as business expenses. This applies not only to self-employed individuals but also to employees using the vehicle for work.

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You must document the professional usage clearly. Keeping a detailed logbook can help separate business mileage from private use, with precise records of each trip and its kilometers.

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Deductible expenses include not just the subscription fee but also related costs—like fuel or electricity—provided they can be clearly attributed to professional use.

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What are the requirements?

To properly claim a car subscription on taxes, you need to fulfill a few conditions:

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• Proof of business use: At least 10% of usage must be professional. If the vehicle is used solely for work, all associated costs may be deductible; otherwise, only the portion related to business use applies.
• Clear cost separation: You must distinctly document business versus private expenses since only the former are deductible.
• Keep receipts: Preserve all invoices and receipts related to the Auto-Abo for your tax return.

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Tips:

• Keep a logbook—digital apps now make that much easier.
• Calculate deductible amounts, including subscription fees and other operating costs.
• Include these figures in your tax return, and consider consulting a tax advisor to maximize deductions.

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What if you use the subscription privately?

Private use doesn’t automatically disqualify deductions—but you must prove at least 10% professional use to claim them.

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Private usage leads to a taxable benefit, which you can account for with either:

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• The 1% rule, or
• The logbook method.

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The 1% Rule

Use this method to simplify tax treatment: you declare 1% of the vehicle’s gross list price each month as a taxable benefit. For example, if the list price is €30,000, the taxable benefit is €300 per month.

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To apply this rule, the vehicle must be used at least 10% for business. A logbook or documented usage supports your claim.

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The Logbook Method

This requires more effort—but can be more precise and possibly more advantageous. You record:

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• Date and time of each trip
• Purpose (business or private)
• Start and end locations
• Kilometers driven

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This method allows you to claim only the percentage of costs corresponding to business use.

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Commuting Allowance

If you drive to work, you can also claim 30 cents per kilometer as a commuting allowance. Keeping a logbook helps you substantiate this claim—or you might combine it with the 1% rule for clarity.

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What about electric and hybrid vehicles?

Electric vehicles (EVs) and plug-in hybrids qualify for reduced taxation:

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• EVs with a list price up to €70,000 are taxed at just 0.25%.
• Higher-priced EVs and hybrids use a rate of 0.5%—meaning significant savings compared to standard taxation.

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JobAuto: Salary Conversion Car Subscription

The JobAuto lets employees get a car subscription through salary conversion, yielding up to 40% savings on subscription costs—especially appealing when using EVs with favorable tax treatment.

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Summary: How to Deduct Your Car Subscription

• Ensure at least 10% business use—keep records.
• Use either the logbook for precision or the simpler 1% rule, aware of pros and cons.
• Claim the commuting allowance where applicable.
• Choose electric or hybrid vehicles to benefit from steeply reduced tax rates.
• Consider the JobAuto model for salary-based subscriptions with extra savings potential.

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What Employers Should Do Now

1. Use the FINN JobAuto calculator to estimate cost and savings from salary conversion.
2. Dive deeper into Auto-Abo implementation through NAVIT’s resources.
3. Evaluate current mobility offerings within your organization.
4. Get expert help from a mobility partner like NAVIT to streamline management, billing, and taxation.

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