If you run a company in the Netherlands, you or your employees may use a company car. If you use this car privately, this may have fiscal consequences, both for business owners as well as employees.
Private use of a company car can have consequences on income tax, payroll tax, and turnover tax (VAT).
Deduct car costs from your profit
Do you drive a company car? Then the car is part of your business assets. This means you can deduct all car costs, such as maintenance costs, parking bills, and motor vehicle tax, from your profit. You must settle any private use with the car costs of your company.
Company car and income taxes
Do you drive less than 500 kilometres privately per year with your company car? Then you must include the car in your business assets. If you drive more than 500 kilometres privately per year, you may decide to include the car in your private assets. In that case, you can still use the car for business purposes, but you cannot deduct car costs from your profit. However, you may deduct €0.19 per kilometre.
Addition (bijtelling) for private use of a company car
Do you use your company car for private purposes? Then you must pay a private use addition (bijtelling, in Dutch). This is settled in your annual income tax return. The addition is calculated on a percentage of the value of the car. The exact percentage depends on several factors, such as the CO2 emission of the car involved. Read more on the addition percentage in chapter 23 Vervoer en reiskosten of the Dutch Tax and Customs Administration’s Payroll Taxes Handbook (Handboek Loonheffingen, pdf, in Dutch).
Consequences private use for employees
If your employee uses a company car for private purposes, you must add a sum to their wages before tax (private use addition). After all, they benefit from this private use.
No addition with the annual 500-kilometre limit
If your private use of the company car does not exceed the annual limit of 500 kilometres, no addition is required. However, you must be able to prove this with complete records (in Dutch) of all kilometres travelled with the car.
Private use of a driving school car
Do you run a driving school and do you drive less than 500 kilometres privately per year with your learner car? Then you must include the car in your business assets. If you drive more than 500 kilometres privately per year, you have to decide if the car will be part of your private assets.
Paying VAT on the private use of company cars
You have to decide if you include your car in your private assets or in your business assets for VAT purposes. Even if you include your car in your business assets in the income tax return, you may choose to include your car in your private assets for VAT purposes. Make sure that your choice is reflected clearly in your administration.
Do you transfer your private car from your private assets to your business assets? Then you are a customer and seller at the same time. You may not deduct this purchase.
VAT and car tool
Use the online tool VAT and car ('Rekenhulp btw en de auto', in Dutch) to calculate the VAT for your situation.
Simplified kilometre record
In some cases you may keep a simplified kilometre record (in Dutch) to prove that you drive less than 500 kilometres privately a year. For instance, if you make many trips each day with your delivery car. Driving instructors may also keep a simplified kilometre record.
Please note: Private use of the company car during work or lunchtime is not allowed at all when you make use of the simplified kilometre record.
Private use of a delivery van
For almost all delivery vans the same rules apply as for private use of a company car. Delivery vans that are only used for transporting goods are the exception. For example, vans that only have a driver’s seat and for which the passenger’s seat has been sealed. Do you own such a delivery van? Then you may offset the car costs against the private kilometres. You may deduct what is left over from your profits.
Using a delivery van solely for business purposes
Do you or your employee use a delivery van only for business purposes? Then you can declare this to the Dutch Tax and Customs Administration (Belastingdienst) with the Declaration use of delivery van solely for business (in Dutch). With the declaration:
- You do not need to account for the private use of the delivery van when you calculate your profit.
- You do not need to keep a kilometre record.
However, there are conditions:
- You may not use the delivery van for private use at all.
- If there are any changes on using the van for business purposes, you must report this to the Tax and Customs Administration.