Misuse of Company Vehicles

It is not only the average employee who likes to use a company car for private trips; high-profile examples also show that some people are not very strict about the intended business use of company vehicles. While the scandalous 5,000-kilometre trip through Spain by SPD politician and former Federal Health Minister Ulla Schmidt in 2009 is exceptional, employees’ weekend trips in company vehicles are usually less extreme. Nevertheless, they are contractually prohibited and similarly inappropriate. In Ulla Schmidt’s case, the public outrage was particularly great because she had her company car driven 5,000 km across Europe by a chauffeur, incurring hourly and expense rates, and the car was far from fuel-efficient, causing around €1,000 in fuel costs and a significantly above-average CO₂ output.

 

However, this is only the tip of the iceberg. Much more common—and economically more serious—is the frequent abusive private use of company vehicles. Our corporate investigators in Hanover handle the clarification of such contract breaches. Through surveillance of the relevant employees and/or investigation of travelled routes and trips, we determine whether the employee has violated the vehicle usage agreement. A clear contractual foundation is crucial: does the employment contract or the vehicle usage agreement specify whether private trips are permitted and taxed accordingly, or is the company car strictly for business trips? Although company cars are often permitted for private use, the scope of such trips is usually specified in contracts to prevent employees from exceeding limits. Detective agencies such as Kurtz Investigations Hanover can be engaged to observe suspicious employees and legally document any misuse of the company car: +49 511 2028 0016.

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Private Use Rules and Contractual Clarity

If private use is contractually allowed, the company car represents a taxable benefit, which the employee must declare as part of their gross salary. The taxable benefit is determined either using a logbook recording all business and private kilometres or via the “1% rule,” which requires the employee to pay tax on 1% of the car’s list price per month, including VAT and social security contributions. This covers private trips and commuting between home and work. The Federal Fiscal Court clarified in its 6 October 2011 ruling (VI R 56/10) that no taxable benefit arises if the company car is provided only for commuting.

 

Our Hanover detectives are also repeatedly called when contracts are ambiguous, making it easy for employees to exploit apparent grey areas. Even if the allowed private use is clearly exceeded, surveillance of the employee and/or vehicle is recommended. For example, if commuting is permitted but other private trips are prohibited, our corporate investigators will check any suspected misuse.

 

If a contract explicitly excludes private use, no non-business trips are allowed—neither commuting nor short stops such as at a bakery or pharmacy. In such cases, the company car is for business use only. Any misuse constitutes a breach of employment and/or usage contracts and may lead to employment law consequences. A 2014 case illustrated that, in some instances, a formal warning may be required before a dismissal for misuse is valid: an employee with a disability used the company car to transport materials home because public transport was not feasible, and the private use was not explicitly forbidden in the contract. The court ruled the dismissal invalid (LAG Rhineland-Palatinate, 03.11.2014, Az. 2 Sa 152/14).

Falsified Logbooks as a Concealment Tool

When employers provide company cars strictly for business use, any private trips—whether to relatives, shopping, or elsewhere—are contract violations. Employers may suspect misuse but lack proof if mileage logs match reported business trips. In such cases, our private detectives in Hanover can observe the employee to determine whether the car is being used for private purposes: kontakt@kurtz-detektei-hannover.de.

 

Investigating suspected misuse is about more than fuel costs; it is about the employer–employee trust relationship. Even short private trips that cause minor financial loss affect the principle: ignoring breaches encourages further violations. Our Hanover corporate investigators recommend drafting employment and vehicle usage contracts precisely, leaving no loopholes, and acting quickly when misuse is suspected to prevent further losses.

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Altering travel expense reports to conceal actually undertaken private trips, while still presenting a seemingly plausible breakdown, is not difficult in most companies, as these processes often rely heavily on trust.

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If you suspect an employee is using the company car for private trips despite strict contractual clauses, and it has been seen outside working hours at cinemas, restaurants, or even distant holiday destinations, contact our IHK-certified detectives in Hanover. Our investigators provide indisputable evidence through surveillance of the employee in their free time, showing whether the company car is misused. All evidence—witness statements, written surveillance reports, photo and video documentation—is legally admissible. For a confidential consultation, call: +49 511 2028 0016.