ᐅ Incentives for Photovoltaic Systems – Easter Package

Somehow, you have to find a way to pass the time until Easter. ;-)

askforafriend schrieb:

My employer pays (yes, with the money earned by its employees) actual cash as a full-service lease rate including depreciation, interest, maintenance and wear-and-tear package, tire replacement, broadcasting fees (yes, these must also be paid on company cars), vehicle tax, fuel, and other charges like safety inspections, driver’s license checks, etc.—everything that comes with bureaucratic Germany. Let’s say a Skoda Octavia then has a rate including fuel of 700 euros (about $740). This (real!!) money is transferred by my employer to the financer/leasing company. Those are (real!) revenues for the leasing company, which in turn pays its employees and so on. A perfectly normal process in Germany 🙂

Your points somewhat miss my argument. It’s not about the “real” money from your employer, but about the car benefit for private use, on which you pay reduced taxes and no social security contributions, unlike cash salary payments. But to stay with the employer example: the leased car costs your employer real money, true, but already step one is exempt from sales tax. It costs them 700€ (about $740), not 833€ (about $880). They also (hopefully 🙂) pay this from their revenue and reduce their profit, i.e., without having paid income tax on it beforehand.
As a private individual, these options are basically not available to you, right? You must pay sales tax, and on top of that, it comes from your taxed salary.

You further mention that you pay the 1% rule and the distance kilometers tax. That’s correct, but unfortunately heavily subsidized, because as you say, the car costs 700€ (actually 833€ as a private customer) plus fuel, and you pay tax on a significantly lower value based on the list price. Why?
That is an extremely favorable tax benefit!

The commuting kilometers, thanks to the commuter allowance, are basically just shifting money around.

askforafriend schrieb:

Now the employer also allows me to use the company car privately, which is taxed like any other taxable benefit.

Maybe that’s the root of the problem. Applying a flat tax rate to company benefits without limit is convenient but unfair. And then not even charging social security contributions on it, although it is part of the compensation … well, I don’t think that’s right.

askforafriend schrieb:

1) I honestly can’t understand how you come to the conclusion that I don’t pay social security contributions on the company car. It’s always the same in every taxable benefit calculation, whether company car or other perks from your employer.

I hope you recognize the contradiction in those two statements yourself ;-)

You do _not_ pay social security contributions on in-kind benefits, which in the case of private use of a company car are particularly high (and neither does your employer).

askforafriend schrieb:

2) My employer has 700 euros (about $740) in expenses for this vehicle. Yes, that is real money that must first be earned (by me, actually 🙂 ). I pay an additional (net) 335 euros (about $355). So together my employer and I pay quite a lot for this car, don’t you think?

Yes, that’s a lot of money for a car—but no, not enough.

By the way, the biggest beneficiary of this arrangement is not you but your employer. Using your example: your employer has an employee who needs a vehicle for their job, e.g., for customer visits. Undeniably a business expense, in this case 700€ (about $740). Now the employer is clever and says to the employee: “Hey, you can take the car home and use it privately too. That’s convenient for you because there’s no risk and you get to drive a new car for a flat rate, something you couldn’t do as a private person, but I as a business owner can.”
However, since you get a car from me, I won’t pay you 5000€ (about $5300) salary per month, but only 4700€ (about $4950). Fair enough.
At that moment the employer actively shares vehicle costs with the employee. Convenient for them.
They not only save vehicle expenses but also social security contributions of about 20% on the 300€ (about $315) salary reduction, totaling roughly 360€ (about $380) per month.
And just like that, the car doesn’t cost 700€ (about $740) anymore but only half.

For both sides, it might be a win-win, but not for everyone else. The advantage comes from tax benefits (the employer passes on the car at cost, something a private individual could never do: no sales tax, no depreciation/deductions as a private person, etc.) and from savings on social security contributions.

askforafriend schrieb:

Maybe the problem is that we have too many cars?

Definitely. That’s something we have created over decades with various incentives, whether financial or by building cities for cars. I don’t want to demonize cars in general—without cars, we’d be in a tough spot.

askforafriend schrieb:

It would be more sensible, for example, to limit the number of cars rather than electrify them all.

Pretty radical. Is that really the best way to manage change?

askforafriend schrieb:

The diesel privilege should have been abolished a long time ago. Outside Germany, no one really cares about diesel engines. The problem was that some years ago, people believed diesel cars produced less CO2 than gasoline cars (which is true)—so they were supported.

The diesel privilege was introduced in the mid-1990s to keep the German logistics industry competitive in Europe.
At that time, diesel passenger cars were not really relevant; they were slow, noisy vehicles.
Because the diesel privilege was structured to benefit anyone filling up at the pump, it became a strong (mis-)incentive to make diesel relevant again for passenger cars. The key was the TDI engine — turbocharged diesel engines in passenger cars.
This is how the German taxpayer ultimately made the diesel car socially acceptable with tax money. And now we cannot get out of this mess because both the industry (wants to sell diesel engines) and consumers (want affordable driving) are dependent on it. Politically, a tricky situation where there is no winning.

By the way, a fair tax base would be the energy content per liter of fuel. Diesel engines do not consume less than gasoline engines due to better efficiency, but because a liter of diesel fuel contains more energy than regular gasoline. As a seller, I would have an interest in pricing my fuel accordingly.
From an environmental agency standpoint, I would want to levy taxes based on emissions.

guckuck2 schrieb:

and also no social security contributions

False, see the calculation above

guckuck2 schrieb:

correct, but he already acts VAT-exempt in step 1. It costs him 700€ (about $770), not 833€

Wow, do you really want to eliminate VAT deductions for all businesses now? That’s a left-wing idea 🙂 I assume you also didn’t pay VAT on your photovoltaic system, right 😉 This applies not only to leasing fees, but it’s a general rule. Wow.

guckuck2 schrieb:

As a private individual, these options are usually not available to you, right? You have to pay tax on that so-called “fairy-tale tax,” and that on taxed earned income.

No, of course not, that’s why you’re a private individual. You’re free to register a business or become self-employed and take advantage of the system (which, according to you, is so profitable) 🙂 By the way, you have to pay actual! money to the leasing bank if you are self-employed AND taxable.

guckuck2 schrieb:

And then not even charge social security contributions on it, even though it’s part of the remuneration... yeah, I don’t think that’s right.

False, please look at the calculation I prepared just for you

guckuck2 schrieb:

Yes, a lot of money for a car, but no, not enough.

Things are getting wilder now. 1355 euros (about $1495) for a Skoda is not enough for you? Alright then 🙂

guckuck2 schrieb:

For those two it might be a win-win, but not for everyone else.

That’s pretty much the killer argument of every decent socialist. Just a debate fueled by envy, without any beginning or end. But now I know where to place you politically. Salary (or other benefits in kind, like the company car) is always negotiated.

guckuck2 schrieb:

Quite radical. Is that how you successfully shape change?

No, you’re absolutely right. Let’s rather replace 2 combustion engines with 3 electric cars *facepalm*

I think it would be great if we could continue the discussion somewhere else and return to talking about photovoltaic systems here 😉

WilderSueden schrieb:

I would like it if we could move the discussion somewhere else and get back to talking about photovoltaics here 😉

Yes! After all, it’s my thread 🙂 Unfortunately, I’m just someone who can’t let general false statements go unchallenged 🙁

WilderSueden schrieb:

I think it would be nice if we moved the discussion elsewhere and got back to talking about photovoltaics here 😉

You’re right, and this will be my last comment in this discussion.

askforafriend schrieb:

Yes! After all, it’s my thread 🙂 Unfortunately, I’m just the kind of person who can’t let blanket false statements go unchallenged 🙁

Your latest post doesn’t address my arguments at all, and by the way, my views are neither left-wing nor socialist. You are very mistaken, but it seems I have touched a nerve. I will leave it at that.
I do want to acknowledge one thing: the employee’s social security contribution is also paid on the monetary benefit. In that regard, my previous statements were incorrect.