The tax consequences of a car accident are as follows: Repair costs, like other vehicle expenses, are deductible between 40 and 100% depending on CO2 emissions. This applies whether the accident occurred during a professional or private trip, so there is no difference in this regard. However, in cases of gross negligence, such as driving under the influence, if the insurer refuses to cover the costs, you could be personally liable for repair expenses, considered taxable private benefits.
The compensation paid by the insurer to repair damages is considered taxable ordinary income, but the taxable amount depends on the deduction percentage for vehicle expenses, based on CO2 emissions.
In the case of a “total loss” where the compensation exceeds the car’s book value, the difference is treated as a “forced capital gain” and can be taxed in installments, with specific tax rules to consider.
The reinvestment obligation applies only to the taxable portion of the capital gain, from 40 to 100%.