The German Federal Ministry of Finance (BMF) has made its first-ever statement on the treatment of electric vehicles for VAT purposes. The VAT Application Decree has been adjusted in this context.
An entrepreneur can use a vehicle that has been purchased for both business and personal purposes and then allocate it to the enterprise in full, not at all, or in part. Deduction of input tax is geared toward the actual allocation. If the vehicle is allocated to the enterprise, the personal use thereof is subject to taxation as a benefit in kind provided on a gratuitous basis.
The BMF had not previously commented specifically on the treatment of the use of electric or hybrid electric vehicles and electric bikes for VAT purposes, so the move marks the first time the ministry has taken a position on providing electric bikes to staff. The ministry notes, first, that any favorable treatment provided under income tax law for electric vehicles or hybrid electric vehicles does not apply to VAT. This means that when the assessment basis is determined, the rate used under the 1% rule is not reduced to 0.5% or 0.25%, as the case may be.
The term “vehicle” encompasses all motor vehicles, including electric bikes that are subject to registration, insurance, and/or driving license requirements. A new section is being inserted into the VAT Application Decree to cover taxation of personal use of bicycles and provision thereof to staff. The tax authorities have no objection if electric bikes that are not defined as vehicles (such as those that are not subject to registration requirements) are taxed in the same way as vehicles. However, a logbook cannot be used to document the amount of use by the staff that is for personal purposes, as there is no odometer on a bike. In the interest of simplicity, there is no problem with applying the 1% rule here.
If the applicable value of the bike is not more than €500 (which is likely to be fairly atypical in practice), there is no need to apply VAT to the provision of this benefit to employees.
Note: The principles of this BMF circular apply to all pending cases.