University of Cologne study calls for reform of German company car tax rules
The "Company Car Taxation in Germany" study by the FiFo Institute for Public Economics at the University of Cologne says that as a result of the tax rules, whereby the subsidy increases with the income of the beneficiary, more than 50% of all new passenger cars in Germany are registered as company cars (about 750,000 vehicles a year).
It adds that reforming the rules would reduce subsidies in tax and social security contributions by €3.3 to €5.5 billion. Also, a reduction in CO2 emissions by 2.9 to 5.7 million tons for the period 2012-2020 could be achieved.
The findings of the report have been highlighed by Brussels-based NGO Transport & Environment. 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.’