Dear ladies and gentlemen, dear clients, dear friends,
the company car is and remains one of the ongoing topics in case law. In a new judgement from 28 April 2023, the Münster Fiscal Court (10 K 1193/20 K G F) has now even ruled against the current opinion of the Federal Fiscal Court. Anyone who previously believed that they could avoid paying tax on private use by means of a contractual ban on use should read our following article.
The initial situation:
The legal dispute concerned a limited liability company (GmbH) that provided its sole shareholder and managing director with a car. Private use was excluded by a contractual ban on use. Due to ban on use, the shareholder did not keep a logbook. According to the shareholder-managing director, his wife’s car was available for private journeys. He was given a lift to and from work by another employee who shared the same commute. The private use of the car was therefore not taxed.
The judgement:
The prohibition of use by a sole shareholder managing director of a company represented by him was not accepted. In the absence of a logbook, private use of the car was assumed and its fair market value was taxed as a hidden profit distribution according to arm’s length standards.
What does this mean for you?
Anyone who previously thought that it was possible to avoid keeping a logbook due to a contractual usage ban, can unfortunately no longer rely on this. The tax court takes a different view to the Federal Fiscal Court.
The last word has not yet been spoken in this case. The legal matter is currently pending before the Federal Fiscal Court. Nevertheless, you should consider playing it safe and keeping a logbook despite an agreed usage ban.
If you have any comments, questions or implementation difficulties, please contact us – we will be pleased to assist you!
Best regards
