Private or company car?
It is important to know whether your car is a private car or a company car. This is because there are differences that affect your income tax and VAT.
Check whether you have a private car or a company car:
- Do you drive more than 500 kilometres per year privately? Then you may choose to keep your car private.
- Do you use your car 500 kilometres or less per year privately? Then you are required to have a company car for income tax purposes. Different rules then apply.
Kilometre allowance deducted for income tax
If you choose to keep your car as a private vehicle (in Dutch) and make occasional business use of it, you cannot deduct any car-related costs from your company profit. You can deduct the company use of the car at 21 eurocents per kilometre. This increases to 22 eurocents on 1 January 2024.
You are allowed to deduct the VAT you pay on car fuel and maintenance from your company profit, insofar as you use the car for VAT-charged turnover.
You cannot deduct VAT on:
- VAT-exempted turnover
- Private use
Also, keep in mind that you will still have to pay VAT at the end of the year for the private use of your car. Commuting is considered private. Therefore, keep records of your kilometres travelled.
You can find an example of VAT-calculation (in Dutch) for business use of a privately owned car on the website of the Dutch Tax and Customs Administration.
Keep track of your kilometres
An accurate registration of your driven kilometres enables you to prove how many kilometres you have driven privately and how many for business use. There are several Tax Administration-approved registration systems you can use, so-called RitRegistratiesystemen, of which you’ll find a list on the Keurmerkritregistratiesystemen website.
You can also use a system of your own choice or making, but be aware that it has to contain the same data to provide an accurate registration.
If you do not keep track of your kilometres, the amount of VAT you will pay will consist of 1.5% of the car’s catalogue value, including VAT, and bpm (private motor vehicle and motorcycle tax).