This article explains the legal principles of the logbook method, the recommended procedure for mapping in Personio Payroll, and specific setup steps. 

What is the logbook method?

If an employer also gives an employee a company car for private use, there is a monetary advantage that is subject to income tax and social security. There are two methods to choose from to evaluate this advantage:

• 1% rule (§ 8 (2) sentence 2 and 3 EStG): flat rate valuation of 1% of the gross list price per month
• Logbook method (§ 8 (2) sentence 4 EStG): custom evaluation based on actual vehicle costs and actual share of private use, provided that a proper logbook is kept. 

The choice between the two methods is vehicle-specific and applies uniformly for the entire calendar year. It is not possible to change during the year. An exception is a change of vehicle during the year. 

Method comparison at a About

You can find out when the 1% rule or the logbook method is worthwhile from the table below: 

Requirements for a proper logbook

The tax office only recognizes a logbook if it is kept promptly, completely, in closed form and without subsequent, unidentified changes. The following minimum information must be provided for each trip: 

• Date and mileage at the beginning and end of each individual business activity outside the workplace.
• The exact address of the destination.
• Travel purposes and the business partners visited.
• The kilometers of private travel and travel between home and the first place of work.

The logbook can be kept either electronically or manually and the following must be considered:

• Later changes to the information must be ruled out. As a result, keeping records in an Excel spreadsheet is prohibited (BFH judgment v. 16.11.2005 — VI R 64/04 BStBL 2006 II p. 410).
• If an electronic logbook automatically records all trips after they have ended with the date, mileage and destination, the driver must complete the records within 7 days (BMF letter dated 04.04.2018, Rz. 25 and 26).

Even minor formal deficiencies or gaps can lead to the complete rejection of the logbook by the tax office. In this case, the monetary benefit is calculated retroactively in accordance with the 1% rule, usually to the financial disadvantage of the employee.

Calculation of the monetary advantage

The monetary advantage corresponds to the private use share of the actual loaded cost of the vehicle:

Monetary advantage = (private kilometers/total kilometers) x total annual costs of the vehicle

The loaded cost include depreciation (depreciation, usually over an eight-year useful life, i.e. 12.5% per year) or leasing payments, fuel or charging power, insurance, vehicle tax, maintenance, inspection and repairs. Extraordinary costs such as accidental damage are excluded and are dealt with separately.

With the logbook method, trips between home and first place of activity are calculated separately on the basis of the kilometers traveled in each case and added to the monetary advantage for purely private trips. 

Illustration of the logbook in Personio Payroll 

Product restrictions

• The widget for the company car agreement in Personio Payroll automatically calculates the monetary benefit, but this only applies to the 1% rule.
• Personio cannot automatically calculate the monetary benefit for the logbook method, as this must be based on the individual, annually changing vehicle costs and the actual share of private use according to the logbook. These values are only available to you or your tax advisor. 
• For the logbook method, the monetary advantage must be entered using separate wage types. 

Our Recommendation

We recommend the following two-step process, which keeps current payslips consistent and at the same time ensures that actual costs are correctly taken into account at the end of the year:

• On a monthly basis, a preliminary, estimated monetary benefit is settled using a recurring salary type. The basis for this is an extrapolation of the expected annual costs and the expected share of private use.
• Once a year, the monetary benefit is finally calculated and subsequently corrected using a one-time payment method as the difference between the actual amount and the amount already billed monthly.

This procedure avoids a single, very high monetary advantage in a single billing month and yet delivers a tax-correct result at the end of the year. If you want to keep things simpler and not make an ongoing estimate, you can alternatively settle the monetary benefit only once a year as a one-time payment. However, please note that this results in a correspondingly high one-time amount in the payroll run.

Set up a logbook method in Personio Payroll

To set up the logbook method in Personio Payroll and display it on the employee's payroll run, proceed as follows: 

Create salary type

The first step is to create one or more compensation types. Depending on the chosen procedure, you will need:

• a recurring wage type for ongoing, monthly payroll run,
• as well as one or two unique wage types for adjustment at the end of the calendar year.

If you want to separate the monetary advantage for private trips from the share for trips between home and first place of activity, a separate wage type is recommended here. You can freely choose the name of the wage types. 

After creating the wage types, contact our payroll support team so that the final setup can be complete in the background. 

For more information on how to set up wage types, see our article on the topic. 

Save booking settings

After feedback from our payroll support team that all wage types have been set up, they must be assigned to a ledger account in the booking settings. This involves the following steps:

1. Go to Payroll > Manage.
2. Click Accounting Report > Monetary Benefit.
3. Search the appropriate wage types.
4. Save the ledger account.
5. Click Save. 

For more information about the accounting report, read our article on the topic. 

Calculation of the monetary advantage

Your employee is required to keep the logbook properly. The monetary benefit is then calculated outside of Personio Payroll by you or your tax advisor. The formula and an example can be found in the section above. 

Enter values in allowances

After you have calculated the values, they must be entered as monetary benefits in the salary tab of the respective employee profile: 

• On a monthly basis, you deposit a recurring salary for the estimated value.
• At the end of the year, there will be a correction using the salary type. 

The entered amount is entered as gross payment in the payslip using the defined salary type and is shown in the accounting report in accordance with the posted posting setting. With the two-stage process, the monthly estimate appears continuously; the adjustment at the end of the year appears once in the corresponding billing period.

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For more information on salary components in the employee profile, please see our article on the topic. 

Manage employee share

If the employee pays his own share of the vehicle costs, this reduces the monetary advantage subject to tax and contributions. There are two options available for this: 

• The own contribution is already deducted when the monetary advantage is calculated. You only enter the already reduced amount via the allowances. 
• Alternatively, for documentation purposes, you can use your own payment method for your own contribution so that this is shown separately on the payroll run.

If your own contribution is paid outside of payslip, for example by direct debit directly to the employer, create a one-time or recurring net salary type. 

In the company car agreement widget, the own contribution can only be automatically stored up to the amount of the monetary advantage. An additional share must also be represented there using a manual wage type. If the personal contribution exceeds the overall monetary advantage, an additional type of net deduction wage is required, as the GWV must not be negative. This also applies to the logbook method. 

Additional notes

When using the logbook method in Personio Payroll, you should also pay attention to the following information: 

• Sales tax: A possible difference from the minimum assessment base for sales tax is not automatically taken into account in the logbook method. If necessary, we recommend that you calculate and record these manually, for example together with your tax advisor.
• Change of method: The choice between 1% rule and logbook method applies uniformly for a calendar year. A change during the year is only possible if the vehicle is changed.
• Complete logbook: If the logbook has formal deficiencies, the tax office may refuse recognition. The monetary advantage is then applied retroactively in accordance with the 1% rule.