- The previous monthly flat rates (30 Euro / 70 Euro) will be discontinued as of January 1, 2026.
- Introduction of an electricity price allowance for 2026–2030 based on the average electricity price published by the Federal Statistical Office.
Tax Treatment of Electricity Cost Reimbursement
On November 11, 2025, the Federal Ministry of Finance (BMF) published a new circular (“Tax exemption under Section 3 No. 46 GITA and flat-rate wage tax under Section 40 (2) sentence 1 No. 6 GITA; Tax treatment of electricity costs borne by the employee”; Reference: IV C 5 - S 2334/00087/014/013). This replaces the BMF circular dated September 29, 2020.
In addition to the established regulations on flat-rate taxation for the transfer of charging devices (Section 40 (2) sentence 1 No. 6 GITA), the circular contains numerous new provisions and clarifications regarding the reimbursement of expenses for electricity costs borne by employees when charging a company car, as well as the tax exemption for charging electric and hybrid vehicles at the employer’s premises (Section 3 No. 46 GITA).
Determination of Actual Electricity Costs
Reimbursement of the actual electricity costs incurred remains possible. However, in the future, employees must provide proof of the amount of electricity charged using a stationery or mobile electricity meter, for example, via a wallbox or a meter integrated into the vehicle. When calculating the costs, the individual electricity tariff, including the proportional basic charge, must be considered.
Particularly relevant in practice: Electricity from private photovoltaic systems can also be considered. In this case, the basis for reimbursement is the household electricity tariff, including the basic charge. For dynamic electricity tariffs, the average monthly cost per kilowatt hour (kWh) may be used.
An employee’s own statement is expressly not permitted. As a result, determining the actual costs remains challenging for employees.
Introduction of the Electricity Price Allowance 2026
Starting January 1, 2026, the electricity price allowance will apply in addition, currently limited until December 31, 2030. The basis is the total electricity price for private households published semi-annually by the Federal Statistical Office (Statistics Code 61243-0001). For each calendar year, the value from the first half of the previous year is decisive.
Option to Choose:
Employers can choose uniformly each year whether to
- reimburse the actual electricity costs, or
- apply the electricity price allowance.
For employees, it may be advisable to wait until the end of the year to determine which option is more cost-effective - provided the employer agrees with this approach.
Example:
For the year 2026, 3,500 kWh are documented.
The relevant average price (first half of 2025) is 34.36 cents per kWh.
If the actual electricity prices in 2026 drop to around 31 cents per kWh, the flat rate is more advantageous for the employee.
Reimbursement of electricity costs at public charging stations based on receipts remains possible without change.
Further Clarifications on the Tax Exemption under Section 3 No. 46 GITA
Tax exemption also applies if the charging device used is located at a fixed business facility of the employer or an affiliated company (Section 15 of the German Stock Corporation Act), and
a) is operated by a third party exclusively for the purposes of the employer’s company (e.g., charging points on company premises), or
b) the charging device is operated by a third party and is available to other users of the same property (e.g., an underground garage in an office complex), if no external third parties have access.
The prerequisite is always that the employer directly bears the electricity costs.
Recommendations for Companies
Employers will in future have the choice between reimbursing the actual electricity costs and applying the electricity price flat rate. While the flat rate offers a simple and transparent solution, reimbursement of actual costs requires comprehensive measurement and documentation. Additionally, it is important to note:
- Adjust internal billing and documentation processes at an early stage
- Train payroll and fleet management staff
- Check charging infrastructure for tax exemption requirements
- Make strategic decisions regarding the annual option to choose
We are happy to support you in analyzing the optimal solution for your taxation and the corresponding processes. Please feel free to contact us!
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Sandra Guyot Sandra Guyot has gathered extensive experience in employment tax consulting for medium-sized companies and international groups of companies since 2013.View Profile -
Jasmin Ochsmann Jasmin Ochsmann has many years’ experience providing advice on wage tax to national and international business of various sizes.View Profile -
Ekatarina Petrusevych Ekaterina Petrusevych has many years’ experience in national and international employee taxation and processing payroll. She is part of the payroll tax subservice line and works in the Düsseldorf office.View Profile -
Stephanie Saur Stephanie Saur has many years of experience in advising on payroll tax. As a Partner, she is responsible for the extension of professional specialisation in the field of employee taxation.View Profile -
Hannes Zug Hannes Zug specializes in comprehensive structuring and defense advice on employment tax issues and annex areas. As a partner at the Hamburg office, he is primarily responsible for the expansion of consulting services in the North/East regions of the Germany-wide employment tax service line.View Profile