Circula Mobility is an employee benefit in the form of a mobility budget. Companies can allocate a monthly budget to their employees that they can use for their mobility needs. Employees can use any type of transportation they need, both for private use and for travelling to work. However, different tax rules apply depending on their choice of transportation.
Pursuant to Section 3 No. 15 of the German Income Tax Act (EStG), an allowance granted by a company to its employees as a salary increase for local public transport (ÖPNV) between home and the first place of work and for private journeys is tax-free.
Public transport (ÖPNV)
Regional trains (RB, RE, etc.)
Long-distance trains and intercity buses
❗️Note❗️: Only for the journey from home to the first place of work is the allowance for a long-distance train (ICE, TGV, etc.) or for an intercity bus tax-free.
Note on annual tickets:
For a public transport annual ticket, the total amount is paid in equal monthly instalments until the end of the term.
Example: If you submit an annual pass worth 400€, you will receive 33,33€ as a refund every month.
💡 Note: The BVG-Annual Pass is not a classic ticket, but a chip card on which only the card number is stored, but no name or time periods. Every holder of an annual pass can request a sales tax invoice from the BVG customer center. This will be sent by mail. This invoice contains all essential information about the holder of the Annual Pass.
Taxed mobility services
Trips in individual and long-distance transport are taxed at the usual rates.
Long-distance trains and intercity buses.
If used for private travel, they are taxable.
Individual transport: Any other type of transport (car sharing, cabs, e-scooters, etc.).
Note: If the mobility budget is used outside Germany, all mobility offers will be automatically taxed.
Commuting allowance (“Entfernungspauschale”)
The tax-exempt benefits pursuant to Section 3 No. 15 EStG reduce the distance allowance. The Entfernungspauschale can be reduced to zero. This reduction is based on the corresponding tax-free allowance granted by the employer to the employee for the use of tax-free means of transport. The reduction can be reduced or prevented by the payment of lump-sum tax on the benefits that are actually tax-free (pursuant to Section 40 (2) Sentence 2 Nos. 1 and 2 EStG) in the amount of 15% or 25%. For more information and examples please visit paragraph 6 of the BMF letter.
Good to know
Each company can set an individual budget for its users.
Tax optimisation: Users can submit as many mobility benefits as they want. At the end of the month, the reimbursable amount that they receive will be determined as it follows:
Tax-free amounts are prioritised
If there is budget left, taxable amounts will follow
Do you still have questions?
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