More and more employees are driving electric cars or plug-in hybrids in their private lives. This raises the question for employers of whether and how charging on company premises or at other locations can be made tax-free. The good news is that those who know the rules can offer their employees attractive benefits without additional income tax or social security contributions.
Employers may allow their employees to charge private electric and hybrid vehicles on company premises free of charge or at a reduced rate without incurring income tax.
The legal basis for this is Section 3 No. 46 of the Income Tax Act (EStG), valid until December 31, 2030. The regulation is intended to promote the spread of charging infrastructure and the use of electric vehicles.
The tax exemption applies under the following conditions:
This allows employers to offer charging at the workplace without having to worry about tax disadvantages. The monetary benefit does not have to appear on the payroll.
Create the work place of tomorrow with NAVIT. We are happy to support you with designing the best mobility solution for your company. Get in touch with us!
Contact us
Under certain conditions, charging outside the company premises also remains tax-free. This applies if:
In such cases, the assumption of electricity costs is considered a gratuitous transfer of value, which may be subject to sales tax for the company. For employees, however, the benefit remains income tax-free, provided that the requirements of § 3 No. 46 EStG (German Income Tax Act) are met.
If the employer reimburses the electricity costs for charging a private electric car or plug-in hybrid at home, this is generally considered taxable income. This applies to both direct cost reimbursements and flat-rate subsidies. The amounts must be taxed via payroll accounting.
The only exception is if the employer applies flat-rate taxation in accordance with Section 40 (2) sentence 1 No. 6 EStG. In practice, however, this option is rarely used, as it only makes economic sense under certain circumstances.
This clearly distinguishes charging at home from charging at work: while electricity may be provided tax-free on company premises, stricter rules apply to the home.
The situation is different in the case of a company car provided by the company that may also be used privately. In its letter dated May 29, 2020, the Federal Ministry of Finance (BMF) set out precise guidelines on when charging a company car at home is possible tax-free.
If the electricity consumption for home charging can be measured – for example, via a separate wall box with a meter or a smart metering system – the employer may reimburse the consumption tax-free, as long as it relates exclusively to the company car.
If the employer provides a wall box or mobile charging device or covers the installation costs, this benefit can also remain tax-free – provided that its use is related to the company car (Section 3 No. 46 EStG).
Further information on tax treatment can be found in the BMF letter dated May 29, 2020, and in the wage tax guidelines.
Our mobility experts at NAVIT would love to share their knowledge with you about the new mobility product. Feel free to get in touch with us!
Get infoEven though the Income Tax Act does not require detailed proof, clear documentation is advisable. It should include:
Clear documentation helps to avoid tax risks and enables easy auditing by tax authorities.
Free or discounted charging of private vehicles on company premises is tax-free until the end of 2030. However, charging private electric cars at home is generally subject to tax.
When charging company cars at home, however, there is some leeway: electricity costs can be reimbursed tax-free on a verifiable or flat-rate basis, provided that the requirements of the Federal Ministry of Finance are met. In this way, the legislator has created clear guidelines for the tax-compliant promotion of electric mobility in companies.
Sign up for our newsletter to receive the latest insights about our mobility solution products like the 49 eurojob ticket.
