Why the company car appears twice on your payslip
Anyone seeing a German payslip with a company car for the first time is often puzzled: gross pay is suddenly higher, but net pay lower. The reason is the taxable benefit. It is added to gross pay as a benefit in kind so that taxes and social contributions are calculated correctly. Because you do not receive the car as money, the same amount is deducted again after the deductions.
A payslip step by step
Take a €5,000 monthly salary and a combustion car with a €45,000 list price and a 20 km commute. The taxable benefit is €720. In simplified form the payslip looks like this:
| Item | Without company car | With company car |
|---|---|---|
| Salary | €5,000.00 | €5,000.00 |
| + Car benefit in kind | – | €720.00 |
| = Total gross | €5,000.00 | €5,720.00 |
| − Taxes and social contributions | approx. €1,843 | approx. €2,196 |
| − Car benefit in kind | – | €720.00 |
| = Payout | approx. €3,157 | approx. €2,804 |
The figures come from our company car calculator for tax class I, no children, no church tax and a 2.9% health insurance add-on rate. The payout falls by about €353. About €196 of this is wage tax and about €157 is health, care, pension and unemployment insurance.
Social contributions: the often forgotten part
The taxable benefit counts as earnings subject to contributions. If your salary is below the contribution ceilings, you pay around 21% social contributions on the benefit. If you already earn more than the health insurance ceiling of €69,750 a year, no further health and care contributions are due on the benefit. Above the pension insurance ceiling of €101,400, pension and unemployment contributions no longer apply either. High earners therefore pay proportionally fewer contributions but more tax.
The higher pension contributions have a small upside: they also earn you slightly higher pension entitlements.
The effect of your tax class
The net cost depends heavily on your marginal tax rate. In tax class III with €7,000 gross, the same combustion car costs about €269 net a month according to the calculator, because the tax rate is lower and health and care insurance are already at the ceiling. In tax classes V or VI, by contrast, the cost is considerably higher. The salary calculator shows how your net pay without a company car is made up.
Other items on the payslip
If you pay a user fee, it either appears as a deduction from net pay or directly reduces the benefit in kind. If your employer has taxed the commute at a flat 15%, this part does not appear in your taxable gross and no social contributions are due on it. This saves you money but reduces the commuter allowance in your tax return.
Money back through your tax return
The wage tax on the company car is not final. In your tax return you can claim the commuter allowance of €0.38 per kilometre from the first kilometre, for example 20 km × €0.38 × 220 days = €1,672. After deducting the €1,230 employee lump sum, €442 of this reduces your taxable income. Together with other income-related expenses this can produce a noticeable refund.
Conclusion
Gross rises, net falls, and yet a company car is usually a good deal. What matters is not the taxable benefit but the actual net cost compared with the cost of your own car.