Income tax treatment of the provision of a BahnCard by the employer

If an employer provides his employee with a BahnCard that is used for both business and private purposes, the following must be observed with regard to wage tax treatment:

Before the BahnCard is handed over to the employee, it must be determined whether the employer’s interest in handing over the card is predominantly internal (predicted full amortisation). This is the case, according to a ruling by the Frankfurt Regional Tax Office, if the forecast costs for single tickets during the period of validity of the BahnCard are equal to or exceed the costs of the BahnCard.

Consequence: In this case, the provision of the BahnCard does not constitute a salary, so that no wage tax liability arises from it. There is no wage tax liability even in the event that the forecast full amortization does not occur for unforeseeable reasons (e.g. illness).

If the travel costs saved by using the BahnCard are lower than the costs of the individual tickets according to the forecast at the time the BahnCard is issued, then there is no provision in the employer’s predominantly in-house interest (forecast partial amortisation).

Consequence: in this case the transfer of the BahnCard represents taxable salary and is initially taxable as a benefit in kind. However, this must be subsequently reduced by the travel costs saved by using the BahnCard for business trips as a tax-free travel expense reimbursement claim. This correction can be made monthly or at the end of the validity period. The costs of the BahnCard are thus divided into a tax-free part for business travel and a taxable part as a non-cash benefit for private travel.

Note: For reasons of simplification, travel costs without the use of the BahnCard can be set as a proportion of business use. This means that only the difference between the costs for the BahnCard and the saved costs for company travel is taxable as a non-cash benefit.