Applying the 0.03% rule
Determining the taxable value of journeys between the home and the primary workplace is basically done, on a calendar-monthly basis, by multiplying 0.03% of the list price by each kilometre of the distance between the home and the primary workplace (Section 8(2) clause 3 of the
Income Tax Act [Einkommenssteuergesetz, EStG]); under this alternative, the basis is equal to a blanket number of 15 days for each calendar month. This will also apply even if the motor vehicle is only occasionally made available to the employee. In the case of working from home, this can result in having to pay tax on an extra amount for 15 days/month even though very few or no journeys to the employer’s main office are happening.
A possible solution – no primary workplace
A primary workplace is the fixed business premises of an employer, of an associated company or of a third party designated by the employer that has been permanently assigned to the employee (cf. Section 9(4) EStG). If
- no primary workplace has been assigned under either public service law or labour law and,
- in addition, none of the fixed business premises visited by the employee meet the legal criteria for primary workplaces
then the employee will not have such a primary workplace. In this case, the 0.03% rule ceases to apply and the employee does not have to pay tax on the extra amount. Public service law or labour law provisions as well as the agreements and instructions that implement these determine the assignment of primary workplaces.
Advice: Any existing provisions in employment agreements that should not apply during a period of working from home should be amended and adjusted accordingly. However, on the basis of the legal criteria, even if no primary workplace has been contractually assigned then, during deployment from a home office, if the employee is supposed to work for (at least) two full working days during each working week, or for one third of his/her agreed, regular working time at an employer’s business premises then these shall constitute the primary workplace.
Individual assessment (0.002% rule)
If there is a primary workplace but the employee does not drive to it every working day then an individual assessment, prepared on the basis of records and covering only the actual number of days at the employer’s main office, may be used.
An individual assessment of the journeys between the home and the primary workplace using 0.002 % of the list price for each kilometre of distance is possible for no longer than 180 days for each calendar year if the following conditions, in particular, are met:
- Every calendar month, the employee has to provide the employer with a written statement in relation to the vehicle specifying on which days (with the dates) s/he had actually used the business motor vehicle for journeys between the home and the primary workplace.
- The employer has to retain these employee statements as records for the payroll accounts.
Advice: The method may not be changed during the calendar year. Employees, in the context of their income tax assessments, are however not bound by the 0.03% rule used in the payroll tax deduction system and are able to switch to using individual assessments for the entire calendar year (for the legal situation with respect to the payroll tax treatment of company motor vehicles provided to employees for their use please see the Federal Ministry of Finance circular, from 4.4.2018, case reference: IV C 5 – S 2334/18/10001).