how common this is
@Roland's source says about 5 % of all employees have access to a business car which they are allowed to use privately as well.
Here's how these (tax) rules work that the article refers to:
- A car can be assigned to/owned by the company/business even if the majority of its use is private. The required minimum business use is IIRC 10 % for employees and 20 % for freelancers/business owners. The latter can choose whether the car is assigned to the business or their private life when business use is between 20 - 50 % (see at the end when that is advantageous).
- (If the car is privately owned, business use can be reimbursed according to a rate per km defined by tax law. In principle, it is also possible to get higher reimbursement by detailed book-keeping of the costs plus a detailed driver's log (caveats see below).
Since this is reimbursement for what tax law considers actual costs, the reimbursement is not subject to income tax.)
If the car is owned by the company/business, gas, maintenance and repair, insurance, depreciation, ... are also up to the company/business. Which means: no VAT on those, since they are normal business expenses like for a car that is 100 % used for business.
For the private use of the business-owned car, however, there are 3 possibilities
If the employee/freelancer/business owner reimburses the company/business for the private use, either by the prescribed rate by tax law or by the rate according to the actual costs like the reimbursement for private car used for business. Again, there are no further income tax implications.
If the actual cost per km is above the reimbursement rate, the employee basically got a benefit that is not subject to income tax.
I've met this as the exception allowed by a basically "no private use" policy for business cars.
A detailed driver's log is kept, and the actual costs are divided according to the privately to business-related kms ratio (plus VAT) and enter the employee/business owner's income tax declaration as non-monetary benefit.
The driver's log is not only a lot of hassle, it is notorious that a tax inspection will always find faults there and then flat-out cancel this option.
From a macro-economic perspective, this method is more precise than alternative 3., but more prone to tax fraud (which in turn is why tax inspections dig into this).
As an alternative, the taxable non-monetary benefit can be calculated (without the need for a driver's log) by the so-call 1% flat rate which puts the monthly non-monetary benefit at 1 % of the gross list(!) price of the car for combustion engines (0.25 % for electric; 0.5 % for hybrid). This flat rate is independent of the privately driven km, the actual price or costs, and the age of the car.
Now rule 3. puts an incentive on having new business cars, and driving them a lot for private reasons. @Rolands source estimates that the 1 % flat rate leads to taxation of only about 40 % of the actual non-monetary benefit.
In contrast, if the car in question is bought used, and if it is small/has low maintenance costs, one would be at a disadvantage with 3., 2. is impractical unless private use is very low, so it may be better/cheaper to then use such a privately owned car and get reimbursed for business travel.
This somewhat explains why according to @Roland's source, most cars start as business car and are then later sold into private hands (contrast that 60 % of new cars are bought by businesses, but only 11 % of all cars are owned by businesses). And this is also why in particular rule 3 for the business-owned cars is also seen as subsidy for the car industry.
