• BFH rules: No Constitutional Concerns Regarding The 1%- Rule
  • April 6, 2013 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Stuttgart Office
  • The BFH has quashed constitutional doubts concerning the 1%- rule on the basis of the gross list new price.

    GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart, Hanover, Bremen, Nuremberg, Essen and London www.grprainer.com/en  explain: In its judgment of 13 December 2012 (VI R 51/11, DB0581148), the Federal Finance Court of Germany clarified a few matters with respect to the 1%- rule in appraising an advantage from the private use of a company car.

    Evidence as to the costs incurred through the private use is to be identified with the help of a driver’s logbook or, where such a book does not exist, the 1%- rule of the gross list new price.

    In the instant case before the Court, a company car was made available to the claimant by his employer, which he was also permitted to use for private purposes. The competent tax authority assessed the monetary advantage from the use of the company car pursuant to the 1%- rule on the basis of the gross list new price.

    The claimant argued, on the other hand, that the list new price was less important here than the actual value of the second-hand car. However, the Federal Finance Court justified its judgment by saying that the 1%- rule was not geared towards accounting for peculiarities or specific features of a company car. It is therefore irrelevant whether the general value of the car subsequently increases or decreases. Aside from the assignment of the vehicle, the advantage would in principle also lie in the assumption of the costs associated with the car.

    A lawyer versed in tax law shall monitor judicial and legislative developments and be able to advise his clients accordingly. In addition to legal advice in tax matters, a lawyer shall also advise you on important topics such as accounting law, sales tax law, company taxation law, as well as real estate taxation.

    Should it prove necessary, a lawyer active in the field of tax law can support you regarding disputes with the financial authorities or judicial counselling before the finance courts. He shall also offer to prepare tax models and assist you with respect to external and field audits.