The extent to which private use of a tradesperson's business vehicles must be accounted for under the 1% rule or by means of a logbook is frequently a point of dispute with the tax office. In the following, the BFH once again takes a position on such a case. We set out below which grounds of decision from this ruling are to be applied when assessing whether the 1% rule applies to a "tradesperson vehicle".
Case in dispute: Tax office applies the 1% rule
In the disputed years 2012-2014, the plaintiff operated a property maintenance service. The business assets included a Mercedes Benz Vito (van) and a Multicar M26 (work vehicle). The plaintiff did not declare any withdrawal under the 1% rule for possible private use of the vehicles. The competent tax office, by contrast, took the view that the Mercedes Benz Vito was also used by the plaintiff for private trips and that the 1% rule therefore applied.
Tax Court ruling: No private car – 1% rule applicable
The Tax Court concurred with the assessment of the facts by the respondent (tax office). Although no images of the Mercedes Benz Vito were submitted by the plaintiff during the proceedings, it can generally be assumed that the vehicle is a panel van which, in the case at hand, was not fitted with business equipment (e.g. permanently installed compartments for tools). In addition, during the disputed years the plaintiff did not own any further vehicle in his private assets besides the Mercedes Benz Vito and the Multicar M26. The Tax Court therefore concluded that the Mercedes Benz Vito could also be used by the plaintiff for private trips, particularly as the plaintiff did not have any further vehicle in his private assets aside from the Multicar M26. The Multicar M26, on the other hand, is excluded from the application of the 1% rule, as it constitutes a pure work vehicle. Furthermore, it would not be plausible that the plaintiff, who lived in a rural area during the disputed years, undertook no private trips at all.
BFH ruling
Before the BFH, the plaintiff argues that the decisions of the lower courts in his case deviated from the following BFH rulings of 18 December 2008 – VI R 34/07 (BFHE 224, 108, BStBl II 2009, 381) and of 17 February 2016 – X R 32/11 (BFHE 253, 148, BStBl II 2016, 708).
In the ruling of 18 December 2008 – VI R 34/07 (BFHE 224, 108, BStBl II 2009, 381), a GmbH had provided its managing director with an Opel Astra as well as an Opel Combo. The tax office in that case applied the 1% rule to both vehicles. In its ruling, the BFH then limited the application of the 1% rule to the Opel Astra only, as the Opel Combo was built like a panel van and was equipped in the rear section with permanently installed material cabinets including lettering. The BFH sees no parallels between that ruling and the present case, as the plaintiff had no other vehicle available for private trips besides the Mercedes Benz Vito. Moreover, the Mercedes Benz Vito in the case at hand is not a "tradesperson vehicle", because it lacks fittings for business purposes (tool compartments etc.).
In the second BFH ruling of 17 February 2016 – X R 32/11 (BFHE 253, 148, BStBl II 2016, 708), to which the plaintiff refers, the business assets included a VW van. Tools were permanently stored on the load area of this van. In addition, the trader owned a further vehicle in his private assets which was suitable for transporting his family. The BFH therefore decided not to apply the 1% rule to the VW van. Here too, the BFH sees no comparability with the present case, as the plaintiff does not own any further vehicle for private trips.
Accordingly, in the current ruling the BFH follows its lower courts and rules that the Mercedes Benz Vito is to be taxed for withdrawals under the 1% rule.
Fundamentally, the following criteria must therefore be observed when applying the 1% rule to "tradesperson vehicles":
- Does the taxpayer have a further vehicle available for private trips besides the "tradesperson vehicle"?
Note: This consideration may not apply for taxpayers residing in major cities if they can demonstrate to the tax authorities that public transport (suburban and underground trains, buses, etc.) and e-scooters etc. were used for all private trips. - Does the "tradesperson vehicle" contain fittings for business purposes (e.g. tool compartments)?