Reimbursement of charging electricity will become significantly more complex from 2026

Based on a letter issued by the German Federal Ministry of Finance (BMF) on September 29, 2020, employers were allowed until December 2025 to pay their employees a tax-free monthly lump-sum allowance for electricity costs incurred when charging company vehicles. The amount of the allowance depended on whether the employee had access to a charging facility at the employer’s premises or not. The reimbursement of electricity costs borne by the employee for company cars generally qualified as tax-free reimbursement of expenses pursuant to Art. 3 No. 50 of the German Income Tax Act (EStG) (in contrast, reimbursements relating to private vehicles constituted taxable income).

This flat-rate reimbursement option for company cars has now been abolished without replacement as of January 1, 2026 by a BMF letter dated November 11, 2025. Since the beginning of the year, only the reimbursement of the actual electricity costs borne by the employee is permitted, based on appropriate documentation.

Stricter documentation requirements for the reimbursement of charging electricity for electric company cars

Employers must document the electricity price per kWh (based on the electricity supply contract, including the proportional base fee) as well as the amount of electricity charged (e.g., wallbox meter, vehicle-integrated meter, or billing statements from external charging stations). The employer must retain the supporting documents in the payroll records.

Alternatively, for simplification purposes, a standard electricity rate may be applied in payroll accounting for the period from January 1, 2026 to December 31, 2030. In this case, the overall electricity price for private households published semi-annually online by the German Federal Statistical Office must be used. This overall electricity price must be rounded down to full cents and then multiplied by the documented amount of electricity charged. For the 2026 payroll tax procedure, the relevant standard value amounts to EUR 0.34 per kWh (rounded down).

The choice between the actual electricity costs and the standard electricity rate must be exercised consistently for the entire calendar year (annual option). A monthly switch between individually documented electricity prices and the standard electricity rate is not permitted.

With the abolition of the flat-rate reimbursement and the introduction of stricter documentation requirements, payroll accounting for employers will become even more complex. Unfortunately, this does not contribute to reducing bureaucracy.
We would be happy to assist you with any questions regarding the transition.