The 0.25% rule: how company-car taxation works for EVs in Germany
Anyone using a company EV for personal trips too has to pay tax on that as a taxable benefit. For a gas car, that's 1% of the gross list price per month. For an EV, it's just 0.25% – a massive discount that German lawmakers built in specifically to encourage EV adoption.
The rule applies to fully electric vehicles (BEVs) with a gross list price up to €95,000 (as of 2026). Plug-in hybrids (PHEVs) are taxed at 0.5% – less of a benefit than a BEV, but still better than a combustion car.
| Vehicle type | Monthly rate | Taxable benefit (€50,000 list price) | Tax/mo. (42% bracket) |
|---|---|---|---|
| Gas/hybrid | 1.0% | €500 | €210 |
| Plug-in hybrid (PHEV) | 0.5% | €250 | €105 |
| EV (BEV) | 0.25% | €125 | €52.50 |
Bottom line: with an electric company car (€50,000 list price), you save roughly €157 a month in income tax versus an equally priced gas car. That's €1,890 a year in tax savings – and you're paying less at the charger too.
Calculating the taxable benefit, step by step
The calculation is simpler than it looks. It's always based on the gross list price at first registration – not what you actually paid or your lease rate:
- Find the gross list price: the sticker price including options, as quoted by the dealer, including VAT
- Calculate the monthly base value: list price × 0.25% = monthly taxable benefit (vehicle only, before commute)
- Add the commute component (0.03% method): list price × 0.0075% × one-way commute distance in km
- Add the total to your gross salary: the result increases your taxable income
Example: VW ID.4, list price €52,000, 19-mile (30 km) commute:
- Vehicle component: €52,000 × 0.25% = €130/month
- Commute component: €52,000 × 0.0075% × 30 km = €117/month
- Total taxable benefit: €247/month
- Tax at 42%: roughly €103/month – that's the entire cost of driving a €52,000 car!
For comparison with a gas-car company vehicle, the taxable benefit would be four times higher. That's what makes EVs so attractive as company cars.
Mileage log vs. flat-rate method: which is better?
With the flat-rate method (0.25% for EVs), you pay the same regardless of how much you actually drive the car personally. That's a win if you use it a lot for personal trips.
A mileage log tracks every business mile exactly, and your personal share of taxable benefit is calculated from actual driving. That pays off with low personal use (under 30%):
| Method | Pro | Con | Recommended for |
|---|---|---|---|
| 0.25% flat rate | No paperwork, predictable | Expensive with low personal use | Personal use >25% |
| Mileage log | Precise, cheaper with low personal use | Tedious, must be kept without gaps | Personal use <20% |
Careful: a mileage log has to be kept daily, completely, and tamper-proof – either on paper or via certified digital logging. Errors give the tax office grounds to fall back to the flat-rate method anyway.
A home charger as a company-car perk: tax-free and free of social security contributions
An employee with an electric company car can also get a home charger from their employer tax-free:
- §3 No. 46 EStG: employers may provide a charger tax-free, or reimburse home charging costs
- Requirement: the vehicle is mainly used for business (which is true by definition for a company car)
- Value: a charger worth €700–1,500 stays fully tax-free – saving €294–630 in tax at a 42% bracket
- Electricity reimbursement: a flat €30/month for home charging can be reimbursed tax-free without itemized proof
Full details on charger funding: Home EV charger incentives 2026: KfW 442 and tax perks.
Buying an EV privately: what's actually deductible?
Without a company-car arrangement, there's little you can deduct on a personal EV, unless it's used for work:
- Freelancers and self-employed: an EV held as business property = 100% deductible business expense (depreciated over 6 years). Charging electricity counts as a business expense too.
- Employees: commuting costs via the standard mileage deduction (roughly €0.30–0.38/km) or actual costs – no EV-specific advantage here.
- Vehicle tax: EVs are exempt from Germany's annual vehicle tax through 2030 (for vehicles registered by December 31, 2026) – savings of €90–200/year depending on weight.
- Home charger as a household service: installation costs can be deducted at 20% (capped at €1,200/year) as a household craftsman service.
Frequently asked questions
Does the 0.25% rule apply to used EVs as company cars too?
Yes. What matters is the original gross list price at first registration – not what you actually paid. A used vehicle bought cheaply can still carry a higher taxable benefit if its original list price was high.
How long does the 0.25% rule last?
The 0.25% rule applies to vehicles acquired or leased by December 31, 2030, with a gross list price up to €95,000. The current rule is confirmed through Germany's 2024 Annual Tax Act. An extension beyond 2030 is likely but not yet legally fixed.
What's the tax treatment if my employer pays for the electricity?
Charging a company vehicle at the employer's own charging point is tax-free (§3 No. 46 EStG). If the employer covers home-charging costs instead, they can reimburse a flat €30/month tax-free. Higher reimbursements need to be individually documented.
Does a more expensive EV company car save more tax?
Not necessarily. As the list price rises, the taxable benefit rises too – but the tax advantage over a gas car scales proportionally along with it. Above a €95,000 list price, the 0.25% rule stops applying (falling back to 0.5% or 1%), which reduces the savings. The sweet spot sits around €40,000–80,000.
Related reading: EV leasing 2026 · True cost of owning an EV 2026 · EVs for commuters · Home EV charger incentives for company cars
