Germany’s company car tax regime robbing nation of up to €4.6bn a year

[mailchimp_signup][/mailchimp_signup]The findings suggest that reform of the country’s company car taxation regime could lead to between €2.9 and €4.6 billion in additional income per year. The finding is particularly important because many of Germany’s car makers finance their models primarily because of demand from companies, so if the company car rules changed, some expensive models might not be economically viable.

The existing rules mean that those people driving company cars typically pay about a third of the car-based taxation that private citizens would have to pay for driving the same car.

Michael Müller-Görnert of T&E’s German member VCD said: ‘An overhaul of the existing company car rules is long overdue. It is companies that buy cars with above average engines and emissions, and as many of these cars are driven for private uses, it creates social costs that the driver does not pay for, as well as an avoidance of income tax. The current tax regime offers no incentives for buyers to opt for more economical cars.’

The study was ordered by Siegmar Gabriel, the environment minister in Germany’s last government, a grand coalition of CDU/CSU and Gabriel’s party the SPD. The CDU/CSU are currently in coalition with the smaller FDP.