Car allowance vs. extra salary payments

Hi all,

Am a bit lost in the german tax regs on this... anyone out there know the implications of a company paying a Car Allowance vs the same gross amount in Salary? I'm hitting at the overall cost to the employer (do they save on employer contributions?) as well as for the employee (are the deductions for both classes of income the same?)

Thanks in advance

Its my understanding that a car allowance gets treated as part of your salary.
Thus it will be added to your gross salary and the whole thing taxed.

The difference between having a car allowance of say 300Euros/mth and having your montly
salary increased by 300 Euros is that if your contract forsees 13 or even 14 "monthly payments" then
you will only get the car allowance 12 times per year.

Taxation of a company car it a totally different thing...

Thanks for that HEM.

Anyone know what the deal on the company side is? Do they get beneficial treatment of a car allowance vs Salary?

As of January 1st I will get a new contract, and I will have to hand in my company car but they will pay me a car allowance. Since my new manager is not located in Germany, he asked me to figure out what a reasonable car allowance in Germany would be for a VW Golf class.

Anyone out here who can recommend what I should ask for? Of course it can't be a random figure, it needs to be argumented. I even wonder if there are legal limits for this in Germany...

Checkout a no-deposit leasing plan with full service (tyres, servicing, insurance) options for the car being considered and add the cost of fuel for the business travel you expect to incur. Most VW dealers will be able to provide this or you can configure your own package with Sixt Leasing
Think carefully (or get advice) on the tax implications, which depend on how it is paid, the intent of the allowance and your required level of travel for business.

Thanks YL6!
I did some calculations and it turns out that I won't buy or lease a car in the near future. The business trips that I have to do will be cheaper either by plane/train or the company providing me with a rental car.