Can you save and deduct the vehicle tax in Germany? Many German retirees must file annual tax returns and pay part of their limited pension to the tax office. There is good news for retirees. They also have the opportunity to reduce their tax burden.
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For example, you can claim that health care expenses, business expenses, or expenses for home assistance or outpatient care services are not subject to taxation. Some may also have the opportunity to save on vehicle tax.
When retirees can deduct vehicle tax in Germany
The use of a vehicle is a decisive factor in calculating the tax. In general, the effect of reducing vehicle tax mainly affects companies or self-employed individuals.
People who use their car for personal purposes are not allowed to deduct vehicle tax.
As always, exceptions confirm the rule. Anyone who continues to work after reaching the standard retirement age has the opportunity to deduct expenses for using a vehicle for work for tax purposes.
In addition, expenses for the acquisition and maintenance of a vehicle can be deducted. Vehicle tax can only be claimed as a tax deduction if work continues as:
- An entrepreneur;
- Freelancer;
- The vehicle is used for professional purposes.
For self-employed individuals, freelancers, and entrepreneurs, a car is considered part of business assets.
- Vehicle tax is accounted for as business expenses because it is one of the ongoing costs necessary for the business.
Private individuals and permanent employees can deduct commuting expenses from their taxes as business expenses. This fixed rate covers the costs of daily trips to work.
- Private trips in a company car are not subject to tax.
- Individuals with severe forms of disability have the opportunity to be fully exempt from vehicle insurance. This is possible if their disability ID includes symbols 'H,' 'BI,' or 'aG.'
Additionally, people who can prove with a disability ID that their ability to travel on the road is restricted due to serious impairments are entitled to a 50% reduction in vehicle tax.
Such individuals have the choice between reducing vehicle tax or the right to free transportation.
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In the context of reducing tax burdens, retirees who continue to work may have the opportunity to deduct vehicle tax if they use their vehicle for work-related purposes, acting as an entrepreneur, freelancer, or using the vehicle for professional purposes. Although private individuals and permanent employees cannot deduct vehicle tax, they can deduct commuting expenses as business expenses up to a fixed rate for daily trips to work. Individuals with severe forms of disability who are fully exempt from vehicle insurance or entitled to a 50% reduction in vehicle tax due to restricted mobility have the choice between reducing vehicle tax or the right to free transportation.
