If you run a business in the Netherlands and you or your employee(s) use a car on business trips, in some cases you may provide an allowance for the costs or offset the costs against tax. What rules apply depends on your situation. In general, the Dutch Tax and Customs Administration (Belastingdienst) distinguishes between driving a private or rental car, a company car or a lease car.
Driving your own car or a rental car
You may offset €0.19 per kilometre against your revenue for business trips made in your own car or a rental car. You may not deduct the VAT (btw) on the purchase price of the car, but you may deduct the VAT on repair and maintenance costs on the condition that you take account of private use of your car.
Driving a company car
Your car is part of your business assets and all motoring expenses are chargeable to your business. You may offset the costs against your revenue on condition that you take account of private use of the car (in Dutch). If you buy the car especially for your business, you may deduct the VAT on the purchase price. If you already owned the car before you started using it for your business, you may not deduct the VAT on the purchase price. You may deduct the VAT on the repair and maintenance costs, on condition that you take account of private use.
Driving a leased car
A leased car is not part of your business assets, but the costs are chargeable to your business. You may offset the costs against your revenue, on condition that you take account of private use of the car. You may also deduct the VAT charged to you by the leasing company.
Employees driving their own car
You may pay your employee an allowance free of tax and social security contributions of no more than €0.19 per kilometre. You may also pay your employee this allowance for commuter travel. You may not deduct the VAT on the purchase price or repair costs of this car.
Employees driving a company car
If your employee drives more than 500 kilometres per year for private purposes, this private use will be taxable as wages in kind. This means that you must add a percentage of the value of the car to the employee’s wages. You may offset the costs of the car against your revenue. You may also deduct the VAT on these costs, on condition that you take account of private use of the car.
There will be a gradual increase in the private use addition rate (bijtelling) for zero emission company cars such as electric cars, hydrogen-powered cars and solar-powered cars. This private use addition is a percentage of the list price over which you pay income tax. The addition also applies if you lease an electric car. These zero emission cars have a lower addition percentage than cars running on fossil fuels.
The addition for your private use is calculated automatically when you file your annual income tax return. You can also calculate the private use addition (in Dutch) with the addition percentages on the Dutch Tax and Customs Administration’s website.
To stimulate the use of lease bicycles, electric bicycles and pedelecs instead of or combined with a company car, you can both drive a company car and a company bicycle. Employees do not have to calculate the number of private kilometres made on the bicycle. Instead, they will have to add 7% of the recommended price of the (new model) bicycle to their taxable income over a period of several years.