Taxes: Traveling extensively? This is how freelancers correctly deduct their company cars

Driving a car is a significant cost factor for self-employed entrepreneurs. It is therefore worthwhile to claim them as business expenses for tax purposes. However, those who work partly from home and partly at the office location must observe several details so that the costs actually have a tax-reducing effect. This is shown by a recent judgment of the Federal Tax Court (case number III R 18/25).

In the present case, an entrepreneur was active as an independent intermediary. He employed several employees in his office. However, he himself often worked from home or was on the road visiting customers. He used his company car for the journeys, but did not keep a logbook. Accordingly, the private use of the car was determined according to the one percent rule. The vehicle is taxed on the basis of the gross list price.

The individual journeys between his apartment and the external office were also claimed by the self-employed person as reducing profit. However, during an audit, the responsible tax office changed the assessments for the years 2015 to 2017. This is because, unlike the entrepreneur, the authority considered the office to be a business premises.

As a result, it reduced the business expense deduction by the expenses for the journeys from home to the business premises, which were calculated at 0.03 percent of the list price. In total, the tax office assumed 220 journeys. This was tax-wise more disadvantageous for the self-employed person.

Definition of the business premises

After an unsuccessful objection, the entrepreneur appealed before the Cologne Finance Court. However, the judges there also evaluated his external office as a business premises. The Federal Tax Court also saw it that way in the subsequent revision. In its opinion, it is not important for the assessment that the self-employed person worked on site every day.

It is sufficient that it is a fixed business establishment that he uses repeatedly and with a certain regularity for his professional activity. 15 days a month are already considered regular.

In addition, he kept documents in the office. His employees also worked in the rooms, and the entrepreneur accordingly fulfilled his business management function there. The fact that the focus of the self-employed work was in the home office and in the field service was irrelevant for the classification of the external office as a business premises.

Comparison with the first place of work for employees

Unlike the entrepreneur, the Federal Tax Court did not recognize a disadvantage in the fact that the business premises are seen differently for self-employed persons than the first place of work for employees. They justified this primarily by the fact that self-employed persons are not subject to instructions, which also includes the choice of workplace.

They did not recognize a violation of the principle of equal treatment. They pointed out that the actual costs incurred could also be determined by keeping a logbook. Since companies are already subject to a recording and retention obligation, the journey method is a reasonable means for self-employed persons to claim their specific expenses.

Practical tip: Claim actual travel costs to the business premises

Entrepreneurs with a similar division of work between home office and office location can learn from the current judgment that keeping a logbook avoids tax disadvantages. However, it is essential to work accurately and to enter all data completely and immediately. Otherwise, there is a risk that the logbook will not be recognized during a tax audit.