You heard correctly: a free car! In this article we show you how you can easily finance your loan instalment with intelligent tax savings.
Lump-sum deduction for work-related expenses
Thanks to work-related deductions you can achieve substantial savings. A lump sum of € 4,000.00 can be deducted from tax as work-related expenses. If, however, you live somewhat further from your workplace, commuting-cost deductions allow you to deduct even higher expenses from taxable income. The tax saved can be used to pay the loan instalment and thus drive a car that is practically free.
Travel costs between home and workplace
Even though leasing interest cannot in principle be deducted from income, the tax authority allows a deduction for the kilometres driven between home and work. However, only if you do not live or work near the railway station. In addition you can deduct the interest on the car loan or personal loan from tax. There is an article here on how you can deduct the interest from tax.
How it works
A kilometre allowance of € 0.70 for cars and € 0.40 for motorbikes can be claimed. This allowance falls slightly as the number of business kilometres increases. Between 15,001 and 20,000 kilometres driven for work, for example, the allowance is € 0.60 per kilometre.
Assume you have a commute of 30 kilometres, which makes – there and back – 60 kilometres per day. This produces the following calculation:
60 km × 60 cents per km = € 36.00 per day
€ 36.00 × 240 working days = € 8,640.00 per year
You therefore save an incredible € 720.00 per month = 8640 € a year!
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