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For the company it doesn’t matter. If they give you a VW Golf or Volvo V40 they are out €800 per month, if they reimburse your travel expense they are also out

For the company it doesn’t matter. If they give you a VW Golf or Volvo V40 they are out €800 per month, if they reimburse your travel expense they are also out €800 per month. For the employee it is cheaper to have a company car than to buy one yourself if you want a brand new car. If you don’t care about driving an old car it could be cheaper to buy your own car and get the travel reimbursement of €800 pre-tax. The big thing about company cars is that for most it’s a status symbol. Straight out of university and you will have a brand new car with all the bells and whistles. You don’t have to save money and it will not impact any credit scores. And if the engine blows up or you drive into a lake, you will get a new car one hour later. At most it will cost you the €100 deductible if you were in neglect. Also, golden cage. I know some developers that don’t want to switch to a better job without a company car because then they will have to spend a couple thousand on a “dirty old used car”.

CamTin 8y ago
While is it always EUR800? There's no option to simply reimburse their mileage (kilometerage?) ? I.e. "You submitted your mileage report to the payroll department and it said you drove 214km on company business since last pay period, so your paycheck will have an extra 214 * 0.29 = 62EUR in it." Actually, in the US it need not even be that complicated. If you are using your car for work purposes, you can simply claim the mileage once a year when you do your taxes. Company cars are, as you mention, mainly a status symbol for high-level executives, possibly including a driver. Even then, I've only heard about it in movies and books. All the real executives I am aware of just get paid enough that they can definitely afford a BMW if they want one. [I use EUR0.29/km here because it is the US Federal mileage rate (54.4 cents per mile), converted for currency and units. With gasoline prices much higher (not sure about insurance, maintenance, etc) in Europe, I would imagine the reimbursement rate would need to be higher.] Also, who pays for the gas? Do you get a company credit card for fill-ups?
- systemtest 8y ago
  We call it a mobility budget. Lets say the amount is €800. You can get a company car such as a Volvo V40 or a VW Golf. If you only drive for business purposes you don't pay tax, so you pretty much drive a car with pre-tax money. If you drive for private purposes you need to add 22% of the MSRP of the car to your yearly income. So for a Golf you need to add about €8000 a year to your taxable income resulting in paying about €3300 per year in extra income tax. Or you can have the company just pay you the money. If you do 2000 kilometers per month of business travel, you can have 2000*0,19=€380 paid out tax free and you need to pay taxes over the remaining €800-€380 = €420. Worst case you are in the 52% bracket and you post-tax "mobility budget" is €600. Also with a company car the company pays for everything, including parking and gas.

CamTin 8y ago

While is it always EUR800? There's no option to simply reimburse their mileage (kilometerage?) ? I.e. "You submitted your mileage report to the payroll department and it said you drove 214km on company business since last pay period, so your paycheck will have an extra 214 * 0.29 = 62EUR in it." Actually, in the US it need not even be that complicated. If you are using your car for work purposes, you can simply claim the mileage once a year when you do your taxes. Company cars are, as you mention, mainly a status symbol for high-level executives, possibly including a driver. Even then, I've only heard about it in movies and books. All the real executives I am aware of just get paid enough that they can definitely afford a BMW if they want one. [I use EUR0.29/km here because it is the US Federal mileage rate (54.4 cents per mile), converted for currency and units. With gasoline prices much higher (not sure about insurance, maintenance, etc) in Europe, I would imagine the reimbursement rate would need to be higher.] Also, who pays for the gas? Do you get a company credit card for fill-ups?

systemtest 8y ago
We call it a mobility budget. Lets say the amount is €800. You can get a company car such as a Volvo V40 or a VW Golf. If you only drive for business purposes you don't pay tax, so you pretty much drive a car with pre-tax money. If you drive for private purposes you need to add 22% of the MSRP of the car to your yearly income. So for a Golf you need to add about €8000 a year to your taxable income resulting in paying about €3300 per year in extra income tax. Or you can have the company just pay you the money. If you do 2000 kilometers per month of business travel, you can have 2000*0,19=€380 paid out tax free and you need to pay taxes over the remaining €800-€380 = €420. Worst case you are in the 52% bracket and you post-tax "mobility budget" is €600. Also with a company car the company pays for everything, including parking and gas.