Allocation of a special lease payment to the total annual expenses

May 31, 2024

The taxpayer leased a car in December 2013 and made a special leasing payment of around EUR 36,500.00.

In December 2013, the taxpayer used the vehicle to a considerable extent for business purposes (1,737 km of 2,068 km = 83.99%). The taxpayer also took the special leasing payment into account in this ratio, meaning that the “actual” expenses were significantly higher than EUR 0.30 per km. The taxpayer claimed these actual costs.

In the subsequent years 2014 to 2016, however, the business mileage only amounted to 11.89% (2014), 19.68% (2015) and 18.82% (2016). On average, this resulted in business use of 18.40%

The BFH (ruling, case no. VIII R 1/21) had to decide on the deductibility of the special payment in 2013. This special payment is not to be spread over the term if it is made for a period of less than 5 years (Section 11 (2) sentence 3 EStG). However, it agreed with the opinion of the tax office that the portion of the special lease payment that is deductible in 2013 should be taken into account over the entire term of use. This is because making the special payment reduced the leasing expenses over the term. The BFH did not take up the view of the lower court that this was an abuse of tax planning (Section 42 AO).