What is the scope of diesel cars

Driving bans for diesel vehicles - tax aspects

24.10.2018

This technical article provides an overview of the tax effects of diesel driving bans.

initial situation

According to the fundamental decision of the Federal Administrative Court, according to which cities may issue diesel driving bans, it is to be expected that diesel vehicles that do not meet the Euro 6 requirements may sooner or later no longer be driven in German cities. After Hamburg, Stuttgart and Frankfurt have already imposed the first driving bans, which are to be implemented in 2019.

Against this background, it should be examined what tax consequences may arise in view of the imposed or threatened driving bans and the associated falling price for used diesel.

Partial depreciation on diesel vehicles as fixed assets

A depreciation to the lower fair value according to § 6 Abs. 1 Nr. 1 Satz 2 EStG for certain diesel vehicles of the business assets presupposes that a probably permanent decrease in value can be assumed. Therefore, such a write-down is likely to be ruled out, at least for vehicles for which the manufacturers have undertaken to upgrade the engines at their own expense. Conversely, this means that a partial depreciation can be considered if the auto industry does not retrofit free of charge. Another prerequisite for a partial depreciation is that the value of the vehicle on the balance sheet date is at least half of the remaining useful life below the planned residual book value. In other words: the current market value of the asset is only reached after more than half of the remaining useful life with scheduled depreciation. It will also be worth discussing which sales price in which regional market is used to determine the amount of the partial value depreciation.

Deduction for exceptional economic wear and tear

While the above-mentioned partial value depreciation is only accessible to those who calculate their operating profit by comparing their operating assets, the so-called income-surplus calculator has the option of a deduction for extraordinary economic wear and tear in accordance with Section 7 (1) sentence 7 of the Income Tax Act. In the case of diesel vehicles, however, this regulation only comes into consideration when driving bans have actually been imposed.

A deduction for extraordinary economic wear and tear presupposes that there is a significant restriction in terms of time and place of use. If it is no longer possible to carry out operational journeys on certain routes due to driving bans, this requirement should be met. The amount of the depreciation is determined by the quantitative scope of the restriction resulting from a driving ban. Since the taxpayer concerned must credibly prove these restrictions, he should keep appropriate records and, in particular, make calculations that prove what proportion of the turnover of his business was achieved in an urban area that he can no longer reach due to the driving ban.

In addition to the special depreciation for exceptional economic wear and tear, the “normal” scheduled depreciation can also be continued.

Retrofitting costs

If the taxpayer wants to avoid a driving ban by having his vehicle retrofitted at his own expense, the costs incurred represent subsequent acquisition costs in accordance with Section 255 (1) sentence 2 HGB, as these subsequent costs serve to maintain the operational readiness of the diesel vehicle. Such retrofitting will not have any influence on the remaining useful life of the vehicle.

Environment or exchange bonus

If the taxpayer making the balance sheet decides against retrofitting his old vehicle and in favor of purchasing a new (diesel) vehicle and has his old vehicle of the Euro 1 to Euro 4 standard scrapped in a verifiable manner, so that he has an environmental or Receives an exchange premium from the manufacturers or dealers, this premium represents a reduction in the purchase price according to Section 255 Paragraph 1 Clause 3 of the German Commercial Code Record the environmental bonus as operating income and tax it immediately. In this case, the full purchase price is to be distributed over the useful life of the new vehicle and written off. Alternatively, the premium can be reduced from the cost of the new vehicle. This then reduces the tax-reducing depreciation volume distributed over the useful life of the vehicle.