If the employer provides his employee with a company car, the private use of this vehicle is within the scope of the employment relationship.

• The employee receives the benefit of being able to use a company car privately because he is making his labor available to his employer. For the employer, this is a business transaction overall, so that (in relation to the company) there is always a 1001TP3 business use.
• Free use is a non-cash benefit (= benefit in kind) that is taxable as wages.

The amount of remuneration in kind is to be determined as follows in accordance with Section 8 (2) EStG:

1. Trips to the general private use can be calculated as a lump sum using the 1% method (calculation per month: 1% of the gross list price of the company car plus optional extras). or with the actual costs incurred for private journeys (this option is only possible if the employee keeps a proper logbook showing the breakdown of his journeys).
2. Trips between Home and first place of work must also be recognized as wages either at a flat rate or at actual cost.
3. Family trips home in the context of a double household management are only to be recognized if the employee undertakes more than one journey per week (only journeys in excess of this are to be included in wages) (Section 9 (1) EStG).

Practical example (blanket method):
An employer provides his employee with a company car, which the employee may also use for private journeys and for journeys between home and the first place of work. The gross list price of the company car was € 57,800 at the time of initial registration. The employee's home is 15 km away from the first place of work. The employee does not keep a logbook, so the employer must apply the flat-rate 1% method and must also calculate the journeys to the first place of work on a flat-rate basis.