You can also use your business cell phone privately – that way it remains tax-free

woman on the phone

The employer can assume the telephone costs of his employees tax-free.

(Photo: The Image Bank/Getty Images)

Berlin The question that often comes up is: Should companies provide a company cell phone or should all calls be made on employees’ private devices? This applies above all to those who need to be reachable on the go for work or who are active on social media for their employer. However, especially in times of tense personnel situations, the mobile phone provided can also serve as an argument when recruiting skilled workers. This is particularly attractive if the telephone costs are tax-free for the employees.

However, companies should note a few points when drafting the contract in order not to endanger tax exemption. A publisher, whose case was decided by the Federal Fiscal Court (Az. VI R 50/20), also had to experience this. The company bought their privately purchased mobile phones from several employees for a symbolic price of one and six euros and then gave them away for further use. After the end of the respective employment relationship, the devices should be returned. In an agreement, the publisher also stipulated that it would bear the monthly costs such as the basic fee and connection fees or the flat rate up to a specified amount. Evidence of the expenses had to be provided by submitting a copy of the invoice.

The company treated the expenses reimbursed to employees as a tax-free benefit. However, the responsible tax office recognized this procedure as an inappropriate legal structure and issued a liability notice against the publisher. The telephone costs should be taxed as a pecuniary benefit. Monetary benefits increase the employee’s taxable income, so wage tax, social security contributions and, if applicable, soli and church tax are calculated on it. The company defended itself before the Munich Finance Court against the classification as a pecuniary benefit and was right. The Federal Fiscal Court came to the same decision in the following revision.

BFH: Employer must buy mobile phone

It was essential for the judgment that effective sales contracts were initially concluded between the publisher and the employees concerned. According to this, the employees were no longer the economic owners of the mobile phones, but could only use them during the period of their current employment relationship. It could also be ruled out that the agreement was a sham deal. After all, it was precisely the goal of everyone involved to ensure the desired tax exemption. Consensual agreements that the concluded contract should not apply would therefore have been nonsensical.

>> Read here: Turn off your work cell phone for three weeks? Employees have these rights when they are on vacation

In the current case, it is also not necessary for the agreement to stand up to an arm’s length comparison. This is due to the fact that the contractual partners are economically independent market participants with conflicting interests. There were no private relationships that could influence the design. It can therefore be assumed that both sides had their advantages in mind during the negotiations. For the publishing house, this consisted of having easy access to mobile phones for the employees. These, on the other hand, benefited from the assumption of costs and the risk of damage was then also borne by the employer.

Monetary benefit or tax-free use

In principle, it is a taxable pecuniary advantage if the employer gives his employee the company cell phone free of charge for private use and assumes all or part of the costs incurred. This applies above all because there is no operational interest on the part of a company in assuming the costs for private calls. The desired tax exemption and the tax advantage expressly provided for by the legislature could only be achieved by the prior purchase of the mobile devices by the employees. The Federal Fiscal Court could not identify an abusive design.

>> Read here: How employers can save on sales tax on company cars

However, the judges pointed out that only the use of company mobile phones is tax-free. To do this, the SIM card belonging to the respective mobile phone contract must be present in the company mobile phone. If it is used in a private device, the tax advantage does not apply.

Practical tip for employees: Claim telephone costs for tax purposes

Employees can claim 20 percent of their telecommunications expenses against income tax. The maximum is 20 euros per month or 240 euros per year. In addition to the basic fees, you can also deduct a flat rate, costs for the Internet or fax fees, connection and provision costs, rent for the router, for example, or the expenses for a telephone system purchased specifically for a job.
More: This is how you can deduct your work from home from your taxes

source site-13