1. Principles of Company Cars
As an alternative (or as an addition) to a travel allowance or a travel reimbursement, employers grant their employees the right to use company-owned (or rented) motor vehicles for private travel that could also include business travel.
The commonly used term “company car” is used to describe a motor vehicle that is owned or rented by an employer, and the right to use that vehicle for private and/or business travel is granted by the employer to an employee.
Note that while travel allowances and travel reimbursements may not be paid to compensate an employee for his private travel expenses, company cars can be legally granted to an employee who only travels for private purposes.
The question of ownership or rental by the employer of the company car is an important distinction that must be made before the discussion of the tax calculation principles.