Federal Fiscal Court ruling: A Lamborghini as a pure company car?

Intriguing Federal Fiscal Court ruling on company cars: How to refute the prima facie evidence of private vehicle use. Regardless of whether it's a luxury car or a mid-size car.

Under what circumstances can the prima facie evidence of private use of a company vehicle be refuted? "According to the Federal Fiscal Court, all relevant circumstances must be taken into account in the assessment – ​​including an improperly maintained logbook," explains tax consultant Daniela Ehlke at Ecovis in Nuremberg. It also depends on what vehicles you have in your garage. Here's what it's all about:

The case: To the customers with the Lamborghini and the BMW

The Federal Finance Court in Munich Photo: © Federal Finance Court/Daniel Schvarcz

A self-employed expert used two leased vehicles for his work – one BMW 740d X-Drive and one Lamborghini AventadorHe kept a handwritten logbook for both vehicles. He had an advertising film for his appraisal office attached to the Lamborghini. In his private assets, the man also owned a Ferrari 360 Modena Spider and one Jeep Commander.

The tax office initially reduced the operating expenses for the Lamborghini within the company's management. Later, it also wanted to allow withdrawals for private use for the BMW. 

The reason: The Logbooks for both vehicles are not readable and therefore not recognizable. For the assumed private use of BMW and Lamborghini, the tax office wanted one percent of the gross list price including the cost of special equipment at the time of first registration as withdrawals. 

However, since this amount in relation to the Lamborghini represented more than one-third of the actual expenses for the years in question, the tax office reduced the actual costs by two-thirds in order to calculate the withdrawal.

Assumption of private use

The general rule is: For private use of a vehicle that a business owner uses more than 50 percent for business purposes, the tax is calculated at one percent of the domestic list price (at the time of initial registration) plus the cost of special equipment and sales tax for each calendar month. This regulation also applies to leased vehicles.

Anyone who uses the vehicle solely for business purposes is not subject to tax on private use. However, the tax authorities assume that an entrepreneur actually uses a vehicle that is theoretically available for private purposes for private purposes. This assumption is based on prima facie evidence, which Prima facie evidence rule.

For pure tradesmen's vehicles (for example, two-seater workshop vehicles with a windowless loading area) the tax office should not assume private use.

Judgment of the Federal Fiscal Court: General experience does not always apply

The Federal Fiscal Court ruled that the prima facie evidence of private use of the vehicle can be refuted. It is sufficient for the taxpayer to demonstrate that the general experience that company vehicles can also be used privately does not apply in their specific case.

To do so, he does not necessarily have to prove the opposite, but it is sufficient that general experience is not applicable to the specific facts of the case (judgment of 22 October 2024, VIII R 12/21). In the present case, the plaintiff owned two other vehicles in his private assets that were very similar to the company vehicles in status and utility value - so the Ferrari and the Jeep. 

The BFH cited the following comparison criteria, among others: Engine power, displacement, top speed, equipment, performance and prestige of the vehicle. 

Therefore, the judges assumed that he did not use the company vehicles privatelyThe Federal Fiscal Court emphasised that, when examining whether the prima facie evidence is undermined, a logbook cannot be disregarded from the outset on the grounds that it is not a proper logbook.

Important for entrepreneurs: careful documentation

The presumed private use of company vehicles repeatedly leads to disputes between businesses and the tax office. "The ruling is encouraging. The Federal Fiscal Court's decision makes it clear that prima facie evidence of private use of a company vehicle is not always irrefutable," says tax advisor Daniela Ehlke.

The entrepreneur or self-employed person can refute the private use if he can prove that he is using a private vehicle that is comparable in use and status to the company vehicle, according to the tax expert.

These could also be two comparable mid-range cars.

A logbook also helps with the argument. "The ruling highlights the intricacies of tax law. While the logbook would not have been sufficient to determine a withdrawal using the logbook method, it was certainly necessary to consider the overall circumstances to overturn the prima facie case," explains Ehlke. "Taxpayers should therefore carefully document all relevant circumstances when maintaining logbooks and allocating vehicle usage to avoid potential misunderstandings or tax disadvantages."

Source: Ecovis; Federal Fiscal Court

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