When does a logbook need to be kept?
A logbook must be kept if the use of the vehicle is to be claimed for tax purposes. It does not matter whether the company car is driven for private or business purposes. In the case of 1-man businesses in particular, the tax office assumes that the company car will also be used for private purposes. It is therefore important to record the relationship between business and private trips in a logbook.
Above all, anyone who drives a company car usually encounters the problem of having to make a decision when calculating the kilometers driven: Do I calculate according to the 1% rule, or do I use the option of a logbook? Because it can be difficult to do the necessary calculations yourself, there are platforms that use a company car calculator make the added value of a company car visible, as well as visualize what savings there are depending on the calculation. It is important that you really deal intensively with these numbers in advance so that you don't have to pay more afterwards.
By leading one logbook it must be documented how many kilometers the vehicle was used for business and private purposes. Only trips made for business purposes are to be accounted for as business expenses.
The alternative to keeping a logbook
If you also use the vehicle privately and want to claim the use of the vehicle for tax purposes, the 1% rule applies if you do not keep a logbook. This means that one percent of the gross list new price of the car is used as the value that you have to pay tax on as operating income on your balance sheet every month. Anyone who applies the 1% rule saves a lot of time, since the annoying task of keeping a logbook is no longer necessary. Unfortunately the 1% rule often financially unfavorable than recording trips in a logbook.
There can be several reasons for this: the more a vehicle is used professionally, the more unfavorable the 1% rule is, because you can deduct more expenses from your taxes. The following also applies: the newer your vehicle, the cheaper the 1% rule is. The tax office always bases taxation on 1% of the new price of the vehicle. Even if you bought your company car used, 1% of the new price is still calculated. So it's worth checking whether the 1% rule or keeping a driver's log is the better bookkeeping for you from a tax point of view.
It is often the case that applying the 1% rule is worthwhile in terms of time but not financially. If you are not sure, you should use the logbook in the first year to have a direct comparison. You can only apply the 1% rule if you use the car for work more than half of the time. Below this limit you are required to keep a logbook.
Is the logbook preferable to the 1% method?
It is difficult to give a general answer here. This can be different for each individual case. If the application of the 1% method is given, every driver of a professionally privately used vehicle should consider which accounting he uses. Here are some examples where using the 1% method is probably not worth it.
- If the vehicle is used primarily for professional purposes.
- If the gross list price of the car is quite high.
- If the car was bought used or is relatively old.
- If the car is already fully depreciated.
Keeping a logbook is often worthwhile. Finally, all costs incurred for the vehicle (fuel, workshop, car insurance, car tax, TÜV costs, parking fees, etc.) can be listed here. It is also advisable to keep all receipts and invoices together with the logbook. Incidentally, fines cannot be claimed for tax purposes. Tolls on private journeys are also not included in the calculation.
How should a logbook be kept correctly?
With a logbook, there are a few points to consider so that the tax office accepts it for tax purposes. For proof of the logbook, business trips, private trips and trips between home and work with the company vehicle must be listed separately and documented in the logbook. Every logbook must contain basic information about the documented vehicle. This includes the license plate number and the mileage on January 01st and December 31st of the corresponding year. It does not matter whether the book is kept electronically or in writing. There is professional software for electronic bookkeeping that can be run on a PC or tablet.
For each individual trip, certain information must be provided to ensure that the tax office later recognizes all entries. In principle, the authorities distinguish between company trips and private trips. Company trips must be documented more precisely than trips made privately.
Anyone who uses the car for work must record the following for a trip:
- The date of the trip
- The mileage before departure and on arrival
- The travel destination and purpose of travel
- Name of company/customer visited
For private trips with the company car, the date, destination and the kilometers driven must be entered. The purpose of the trip or the persons visited is not of interest to the tax office and you do not have to provide any information on this.