What is a pool car?

23. Mar 2021 | By Tim Ruhoff

A pool car is not classified as a company car. Company cars are by definition assigned to a specific person. A pool car, on the other hand, is intended for use by several employees.

Pool car - what is it exactly?

The pool car is kept in a company's fleet and is interesting for employees who do not have to drive a company car on a daily basis. Pool vehicles are mainly used for business trips. The vehicles can also be used for private journeys if this is possible under tax law and is declared accordingly. However, private journeys can also be prohibited. If a pool car is used for business, then the business trips are free of charge.

Pool car management - how is this designed?

The system, also known as Corporate CarSharing, works via sophisticated reservation mechanisms. A reservation system is usually used, which can be managed by sophisticated software or manually. Programs such as Outlook and Excel are also used for reservations. Pool vehicle management takes care of the vehicles. A fleet manager may be employed to conduct necessary and legally required safety briefings. The fleet manager also checks the driving licences of employees who wish to use a pool vehicle.

If the pool vehicle management is designed efficiently, then a fleet with jointly used vehicles can offer savings potential. In order to achieve the greatest possible savings potential, the utilisation statistics of the fleet must be effective and, if necessary, optimised.

Pool car - to allow private trips or not?

The pool car can be used for private journeys if this is claimed in the tax and is permitted by the company. The decision as to whether a pool vehicle can also be used for private trips is borne by the respective company itself. If a company does not allow pool vehicles to be used for private parties, then there may be penalties for non-compliance. Non-compliance with the ban can be monitored by tracking, for example.

Advantages of the private use ban:

  • Workplace distance is reduced
  • Tracking devices can be installed

If vehicles are used exclusively for business purposes, tracking devices can be installed. Of course, the legal aspects should be clarified before installing tracking devices. If the vehicles in Corporate CarSharing are also used for private journeys, then these journeys may not be tracked. The company must find a solution that prevents the recording of private journeys.

What has to be considered in terms of tax law?

If a company vehicle or a pool vehicle is also used privately, then the imputed income should be taken into account. In the case of pool vehicles, the imputed income is calculated from the total of the existing, jointly used vehicles. The so-called 1 percent rule is used. For this purpose, the value of the fleet is divided by the number of all entitled employees. The figure obtained is to be taken as an average value from which 1% is deducted from the employee's income. The one percent is deducted regardless of usage. This means that it is not decisive whether the pool vehicle is actually used for private journeys or not.

A driver's logbook can also be used as an alternative. In a driver's logbook, private journeys and business journeys are recorded in minute detail. The logbook can be kept digitally or in paper form. Paper forms, which require manual recording, belong to the costly recording variants. Electronic or digital logbooks are better. These can be kept with comparatively little effort. Digital solutions are available that can be used via browser (web app) or smartphone app. Care should be taken to ensure that as many operating systems as possible are supported.

Private use ban - how can it be implemented?

If the Corporate CarSharing vehicles are only to be used for business purposes and private use is prohibited, then the private use prohibition must be in writing. It is advisable to also stipulate the ban on private use of vehicles in Corporate CarSharing in the employees' employment contracts. This also applies to executives such as managing directors. The company should insist on strict implementation of the ban on private use, because the tax office must not find out about a breach of the ban. If the private use ban is violated, then a tax burden on the company is assumed and there is a non-cash benefit. This already applies if an employee is given the opportunity to use a vehicle from the fleet for private purposes. The prohibition of private use must be checked regularly, otherwise the tax office assumes private use.

Booking of vehicles - no entitlement to identical pool cars

If a vehicle pool is used and made available to several employees, then an arrangement can be found for the repeated use of the identical vehicle, but the employee in question is not entitled to the same vehicle. In order to enable an optimized booking of vehicles, software systems such as fleetster are used. The systems keep so-called category bookings, which only show the vehicle category but do not list individual vehicles. This avoids the choice of a favourite car.

One percent rule - pool car vs. company car

A company car that is available to an employee can be used for private journeys. The 1 percent rule is often used for tax separation. Here, 1 percent of the new price of a vehicle is offset against income tax as a lump sum. The vehicle value is offset against the respective income by 1 percent and taxed accordingly on an individual basis.

If a corporate car sharing fleet exists, then the monetary benefit is allocated equally to all employees entitled to use the vehicle. This calculation can be perceived as unfair, because not every employee uses the vehicle to the same extent for private journeys.

Taxation via the logbook

In general, the pool vehicle taxation is very complex and there are often difficulties with the tax office. It is advisable to keep a logbook and to record private and business trips meticulously. The disadvantage of a logbook is that it is very time-consuming. Manual driver's logbooks often have to be proven with receipts and kept accordingly. Due to the high time expenditure, companies not infrequently resort to the 1-percent rule. The solution to not needing the 1-percent rule can be a ban on the use of private journeys. If a business owner doesn't want either the 1 percent rule or the private driving ban, then an electronic logbook can help. A digitally kept driver's logbook reduces the amount of paperwork.

Modern developments for booking

Vehicles can be booked via an app, for example. A company-internal app enables uncomplicated booking for employees of a user pool. For this purpose, the vehicles must be registered and the authorized employees must be included in a user pool. An innovative booking platform shows which vehicles are available and can be booked. The booking platform should also show the location of the free vehicle. An effective booking platform can replace less efficient systems (Outlook and Excel) for booking.