Private Use of Company Cars: Federal Fiscal Court Confirms Application of the 1% Rule in the Absence of a Logbook

Overview of the Federal Fiscal Court Decision

In its judgment of January 16, 2025 (III R 34/22), the Federal Fiscal Court (BFH) clarified: If a company car is used without maintaining a logbook, the presumption of private use applies. As a result, the flat-rate 1% rule pursuant to § 6 (1) No. 4 Sentence 2 German Income Tax Act (EStG) must be applied. For companies, this ruling has significant implications for documenting vehicle usage and for the tax treatment of company cars.

In the case at issue, an entrepreneur used a pickup truck that was classified as part of the business assets. Since no logbook was kept, the tax authorities assumed private use and applied the 1% rule.

The Fiscal Court had initially ruled in favor of the taxpayer. However, the Federal Fiscal Court overturned that decision: neither a case-by-case analysis nor a review of the overall circumstances justified an exception to the presumption. The BFH made clear that if a vehicle is suitable for private use, private use must be assumed unless there is sufficient contrary evidence.

Analysis: Implications for companies

1. Stricter documentation requirements: Without a properly maintained logbook, private use will automatically be presumed — regardless of actual usage patterns. Companies must document trips clearly to avoid adverse tax consequences.
2. Higher tax burden under the 1% rule: Flat-rate taxation based on the vehicle’s gross list price can lead to significantly higher taxable amounts than actual private use would suggest. This is particularly costly for high-value vehicles.
3. Difficulty of rebutting the presumption: The BFH emphasized that excluding individual private trips is insufficient. Only continuous, verifiable business use can rebut the presumption of private use.

Practical recommendations

• Maintain a logbook consistently: An electronic logbook provides a legally robust method of distinguishing between business and private use.
• Assess suitability: Vehicles that are practically unsuitable for private use (e.g., special-purpose vehicles) should be documented as such.
• Simulate tax impact: Before acquiring vehicles, companies should calculate potential tax exposure under the 1% rule.

Conclusion: The Federal Fiscal Court reaffirmed: in the absence of a logbook or clear evidence, private use of a business vehicle must be assumed — and the 1% rule applies. Companies must take documentation requirements seriously to avoid tax disadvantages.