In its judgement on 9 September 2025 (file ref. VI R 7/23), the Federal Fiscal Court (BFH) answered an important question on company car taxation: can costs for a parking space or garage paid by the employee reduce the non-monetary benefit from the private use of a company car?
Private use of a company car: When do “usage fees” or other expenses reduce the taxable benefit?
If an employee pays usage fees to the employer to use his or her company car privately, the non-monetary benefit is reduced accordingly (e.g. when applying the one-percent rule). Journeys for private purposes as well as journeys between home and the primary place of work count as private use. The background to this is that the employee does not obtain a taxable benefit from the employment relationship in the amount of the usage fee (Section 19 (1) sen. 1 no. 1 GITA; cf. BFH judgements of 30/11/2016, VI R 2/15 and VI R 49/14).
This also applies if the employee makes one-off payments for private use, contributes to the acquisition costs of the company car or pays individual use-based costs such as for fuel themselves (cf. Federal Fiscal Court ruling of 16/12/2020, VI R 19/18 and Federal Fiscal Court judgements of 30/11/2016, VI R 2/15 and 04/07/2023, VIII R 29/20).
However, the non-monetary benefit may be reduced to a maximum of 0.00 euros. If the employee’s (one-off) payment exceeds the non-monetary benefit for that month, it can be carried forward to the following month. Regular monthly payments also only have an effect up to the amount of the non-monetary benefit.
The system described above does not apply to payments by way of salary conversion. In this case, the employee’s payments have already reduced gross wages and thus taxable income.
The Federal Fiscal Court provides clarity
The Federal Fiscal Court clarifies that parking space costs borne by the employee themselves do not reduce the non-monetary benefit from use of the company car. In the case at hand, the employer had let his employee use a company car privately and also offered a parking space for 30 euros a month. The employer initially treated these costs as reducing the benefit – the payroll audit and eventually the Federal Fiscal Court rejected this view.
The Federal Fiscal Court considered being able to use a parking space (at no charge) as a non-monetary benefit of its own that stands alongside the benefit from use of the company car. Parking space costs are therefore not part of the benefit from use of the vehicle. The Federal Fiscal Court did not consider the use of a parking space as being directly related to the use of the vehicle but based on a separate decision made by the employee. Parking space costs are therefore not part of the total costs that determine the taxation of the company car. Only costs that are directly related to the private vehicle use and would hypothetically be borne by the employer (e.g. fuel, maintenance, insurance) can reduce the non-monetary benefit – this does not include parking charges.
In its judgement, the Federal Fiscal Court explicitly departed from earlier formulations in which such things as garage costs were included in vehicle costs. It considered that these references were not material to the decision in the cases at that time and are not continued.
Federal Fiscal Court: Exceptions possible in cases of a legitimate business interest
According to the Federal Fiscal Court, a non-monetary benefit does not come about if the employer has a predominant interest in handing over the vehicle for use (e.g. keeping tools or a valuable load in it; cf. Section 8 (2) sen. 5 GITA and R 8.1(9) LStR). There was no such interest in this case, however.
Practical outlook and recommendation for action
The Federal Fiscal Court’s decision brings clarity to the delineation between vehicle costs and other benefits. To apply the one-percent rule, (Section 6 (1) no. 4 sentence 2 GITA) only costs linked to private vehicle use can reduce the non-monetary benefit. Parking space costs are not included in this.
For employers and employees this means: If the employee takes on costs for a parking space, this does not typically reduce the tax burden from the private use of the company car. If employers wish to appeal to their predominant employer interest and thus to the related exemption from tax, the burden of proof is on them.
We will be glad to answer your questions on this topic and support you with practical application.
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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 -
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 -
Thomas Felzmann Thomas Felzmann is an expert in tax control frameworks (tax compliance management systems). With his combination of payroll tax expertise and understanding of processes, he has been successfully implementing TCF projects for many years.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 -
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